Jakarta Post

Why Supermarkets Are Pushing the Boundaries on Fresh Food

To earn customer loyalty in the grocery business, all signs point to fresh food.

By Melanie Sanders, Yngve Andresen and Nader Elkhweet

First published on Φεβρουαρίου 06, 2017
min read


This article originally appeared in the Jakarta Post. It’s tough to get ahead in the grocery business today. Shoppers are disloyal, discounters create mounting price pressures and customers demand more in quality and service. This drama is playing out in many countries, but we decided to take a closer look at the situation in Australia, where we surveyed more than 2,500 supermarket shoppers. Our findings were unsettling: More than 80 percent of respondents told us they routinely cross-shop and spend almost 40 percent of their grocery budgets outside of their primary supermarkets. To win shoppers, grocers need to lower prices while raising quality and service, and they need to adapt costs to fuel these investments. But earning customer loyalty also requires a differentiated proposition, beyond price—and all signs point to fresh food. In our survey, high-quality fresh food ranked at the top, tied with price, as the most important criterion for choosing a grocery store. Fresh food sales have grown 2.5 times faster than sales of dry groceries in Australia. Shoppers told us that buying fresh food is the main reason for 65 percent of visits to their primary store. During those trips, they typically also buy non-fresh items. So the prize for getting the fresh proposition right extends beyond that department, having a halo effect. Global retailers are investing in a range of tactics. Many have created in-store theaters to showcase their fresh offerings, with chefs preparing sushi, for example, or baking bread from scratch. Others offer locally sourced or organic produce. Read more at the Jakarta Post. Melanie Sanders and Yngve Andresen are Bain & Company partners based in Melbourne; Nader Elkhweet is a partner based in Jakarta.

This article originally appeared in the Jakarta Post.

It’s tough to get ahead in the grocery business today. Shoppers are disloyal, discounters create mounting price pressures and customers demand more in quality and service.

This drama is playing out in many countries, but we decided to take a closer look at the situation in Australia, where we surveyed more than 2,500 supermarket shoppers.

Our findings were unsettling: More than 80 percent of respondents told us they routinely cross-shop and spend almost 40 percent of their grocery budgets outside of their primary supermarkets.

To win shoppers, grocers need to lower prices while raising quality and service, and they need to adapt costs to fuel these investments. But earning customer loyalty also requires a differentiated proposition, beyond price—and all signs point to fresh food. In our survey, high-quality fresh food ranked at the top, tied with price, as the most important criterion for choosing a grocery store. Fresh food sales have grown 2.5 times faster than sales of dry groceries in Australia.

Shoppers told us that buying fresh food is the main reason for 65 percent of visits to their primary store. During those trips, they typically also buy non-fresh items. So the prize for getting the fresh proposition right extends beyond that department, having a halo effect. Global retailers are investing in a range of tactics. Many have created in-store theaters to showcase their fresh offerings, with chefs preparing sushi, for example, or baking bread from scratch. Others offer locally sourced or organic produce.

Read more at the Jakarta Post.

Melanie Sanders and Yngve Andresen are Bain & Company partners based in Melbourne; Nader Elkhweet is a partner based in Jakarta.