Retailing in the Week Ahead Week 27, 2019

Last week we launched our annual study of ‘Ultrafresh’. We introduced the notion that retailers need to make four investments to make Ultrafresh come to life.

The first is ‘space’. When doing Ultrafresh well and meaningfully, stores need to be designed and organised differently to make Ultrafresh come to life. You can see this clearly in many stores around Europe when you look at a category like Sushi. 

Rather than have a refrigerated shelf with some Sushi items sitting there, retailers have installed Sushi preparation areas with a Sushi chef visibly working hard inside the preparation area.  This requires a lot more space and, as a result, other categories are given less space.

However, what about ‘Strawberries’?  Do they require different space requirements when they go from just ‘fresh’ to ‘Ultrafresh’? Our teams were out in British supermarkets over the past few weeks and comparing our notes from 2019 to those from 2014 to discover how much had changed in five years of the Ultrafresh revolution. Let me share some findings:

  • Top line: Most retailers have not given more space to Ultrafresh when it comes to everyday fruit and vegetables.
  • First exception to the rule: Aldi and Lidl have given more space and made it look much ‘sharper’ in the last five years.
  • Second exception to the rule: Some retailers have used the opportunity that self-checkouts provide to reimagine the store layout and give more space to Ultrafresh.  They do so by creating ‘fresh islands’ and moving the checkouts further back in the store to accommodate the additional space. This creates new store traffic patterns.
  • Biggest change within the category: In addition to the ‘food islands’ many retailers have begun to create special zones for different needs. For example, some have created freshly cut fruits for children, others ‘still fresh’ areas, some ‘wonky’ sections. By and large, these solutions were not part of the category layout in 2014, but they are mostly standard today.
  • Final ‘surprise’ finding in 2019: We are finding that some retailers, such as Iceland and Home Bargains, have added fresh fruit areas to their stores where in 2014 they did not even list the category. 

Figure 1.  Fresh Islands introduced to take space where self-checkouts are in place

In short, while space allocation for Ultrafresh in some categories is incredibly important  - such as for freshly prepared meals or a ‘cheese experience’ room – for fresh fruits it is not the primary differentiator between a good Ultrafresh retailer and a poor one. What’s more, the amount of ‘change’ in the industry from 2014 to 2019 has been less than we would have expected when it comes to allocating more space for the category. Generally, what has happened is that more retailers are selling the category (primarily from eCommerce and discounters), and that these retailers are doing a better job of merchandising the category.

This week we have picked some ‘space allocation winners’ in our Ultrafresh study. These are retailers that have done a much better job in 2019 than in 2014.

  • Tesco: Since 2014, Tesco, more than any other supermarket, has attempted to introduce fresh islands into remodelled stores, particularly in stores where self-checkout is a dominant form of shopping.
  • Aldi: Since 2014, Aldi has expanded its fresh to move to front of store, where it used to be back of store, and take up more space than in the past.
  • Morrisons: Since 2014, Morrisons has added more features, such as ‘wonky’ zones, ‘free samples for children’, and included seasonality POS materials.

To see our findings in more detail, please click to the associated PowerPoint presentation.

With that, we hope you will tune in for our further weekly updates on Ultrafresh – British Strawberries & Cream.

Please also consider signing up for our upcoming virtual workshop on best practices in Global Convenience and Microretailing on 3 July.  You can get more information by clicking on this link.

If you did not have a chance yet, please also have a look at some of our big featured items from WEEK 26:

Aldi Stores in China – Lessons Learned in June 2019
Ingenious innovations and initiatives: May 2019
Global big-box retreat continues as Carrefour exits China
Alibaba just made it easier to do business in China

Good luck in the week ahead. 

Regards,

Ray Gaul – Ray.Gaul@Kantar.com and @Kantar or @RayGaul on Twitter plus LinkedIn.

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