“Focus on the fresh experience, not frozen pizzas”

“How do food producers stay relevant in this changing world?” That is the question sector economist, Rob Morren of ABN Amro, focused on during the MFC-Event in Gorinchem, the Netherlands. “Food continues to rise on the ladder of interest of consumers. The need to eat is mostly central to that interest, rather than the sales channel,” Morren notes.

“Due to increased consumer confidence, Mr Average spends more on food,” Morren says. “Especially out-of-home channels are experiencing a significant growth. Returns were 1.9 per cent higher, amounting to 17.7 billion euro, 30.9 per cent of total sales of food and drinks in the Netherlands. At-home channels also experienced a modest growth of 1.0 per cent. Now that the crisis appears to be passed its peak, consumers are once again more inclined to prefer A-labels over own brands.”

“The channels consumers buy their products from are changing rapidly. To consumers, the need to eat is more important than the place where they buy their food. To them, it is irrelevant whether a restaurant, petrol station forecourt shop or supermarket can meet that need. It is therefore an enormous challenge for retailers to appeal to potential customers, even more so because target audiences may differ greatly from each other. A millennial has different needs than a Gen X or a babyboomer.”

Morren is of the opinion that retailers would do well to take on an advisory role. “On the one hand this is born from necessity: due to current strict regulations, food has been placed under a magnifying glass, which means retailers have to pay close attention to what they communicate about their products. On the other hand, it is because consumers are attaching more value to transparency, and are determinedly looking for honest advice. British supermarket chain Tesco recently added a traffic light system to their packaging, allowing customers to see at a glance whether their chosen product is a conscientious choice or not.”

With the increased blurring in the food landscape, retailers can put themselves on the map by thinking in terms of meal components, according to Morren. “As a chain, you might offer premium frozen pizzas, but why would you not do that with your own ‘fresh brick kiln pizzas’ near the entrance of the shop? Place focus on the fresh experience, that is where the margins can be found.”