Dive Brief:
- The grocery industry saw unit sales decline across several key categories in August, including produce, meat and seafood, according to Circana data prepared by 210 Analytics.
- Produce unit sales declined 6.7% during the month as the recent cyclospora outbreak caused people to think twice about buying salad, leafy greens and other items, Anne-Marie Roerink, principal of 210 Analytics, noted in an email.
- August was “a very tough month for grocery retailing,” wrote Roerink, and continues the trend of volume declines that have challenged the industry this year.
Dive Insight:
The unit sales declines across numerous fresh food categories underscore a significant challenge for grocers, many of which rely on perishable items to draw shoppers in and differentiate their stores from competitors.
Produce took one of the steepest hits to volume sales during the month, with fresh fruit volume declining 6.1% and fresh vegetables declining 4.2%, according to Circana’s data. That’s impacted grocers like Kroger, which lowered its full-year comp sales guidance earlier this month on the belief that consumers will remain cautious about buying produce.
Meat, seafood and bakery also recorded volume sales declines. Meat department volume sales declined 2.3% compared to last August, with processed meat seeing a particularly steep drop of 5.6%. Fresh seafood volume sales declined 1.9%, while bakery unit sales were 4.3% lower compared to last August.
Consumers appear to be shifting their spending to less perishable alternatives for fresh items. Frozen fruit and vegetables saw a 5.6% year-over-year increase in August unit sales while shelf-stable seafood volume sales increased 5.7%.
Food inflation has moderated in recent months, and in August the food-at-home inflation rate was 2.7%. Still, a variety of macroeconomic forces, from high gas prices to SNAP changes, are putting pressure on consumers’ wallets.
Grocers like Kroger are trying to hold down prices for shoppers and have ramped up promotions. But the challenging economic environment may call for new management approaches, experts say.
In a recent Grocery Dive op-ed, Matt Hamory and Marco Di Marino, both partners and managing directors with consulting firm AlixPartners, recommended retailers transform category management to focus more on driving traffic and developing signature items.
“Declining sales volumes aren’t a death knell for traditional grocers — unless they do nothing,” they wrote.
