Fresh pathways for Australia's fresh produce

A report by Rabobank has identified ‘disruptive forces’ that are at work in Australia’s fresh fruit and vegetable retail market, with a combination of new market trends presenting both challenges and opportunities for the horticulture industry.

The report, titled ‘Fresh pathways to market’, says recent developments — including the rise of ‘hard discounter’ retailers, the growth in online shopping and the ‘premiumisation’ of fresh produce consumption — are seeing Australia’s fruit and vegetable suppliers face greater complexity as retailers look for more customised and differentiated supply solutions.

Report author Marc Soccio says produce has become the key strategic battleground for retailers looking to compete — in both the physical and digital marketplaces.

“It is well proven that the fresh produce section in the grocery store is the key driver of store traffic, average spend and store loyalty,” Soccio says.

“So in today’s market, with consumers becoming increasingly promiscuous and piecemeal in their shopping behaviour, retailers need to get them in the door with a compelling fresh fruit and vegetable proposition.

“This is having far-reaching consequences for fresh produce suppliers, as they need to continually deliver product and marketing solutions that resonate with changing shoppers’ needs and behaviours,” he says.

The future of grocery retail channels

The report says that with growth in per-capita fresh fruit and vegetable consumption remaining fairly stagnant, there is growing opportunity for suppliers to tap into the ‘premiumisation’ trend, with shoppers increasingly willing to pay more for convenient, interesting and healthy products.

For suppliers, this may mean giving up some production yield in favour of a more value-oriented strategy that provides the consumer with products that they’re willing to spend up for.

The report says it is just as important to find the right retail partner to bring the products to market. In an increasingly diverse retail market, suppliers are faced with a wider array of business models — from hard discounters taking market share from the full-service supermarket chain model, to the evolution of independent non-supermarkets and high-street produce retailers, which aim to provide meaningful points of difference to compensate for a relative lack of convenience.

Soccio says understanding this complex and changing market requires a tailored approach according to the type of produce in question, with the retail route to market varying considerably for different fresh fruit and vegetable categories.

The rise of online grocery shopping

While Australian consumers have been somewhat hesitant to adopt the online grocery shopping phenomena — currently only around 3% of the population buy their groceries online — there seems to be little question that its appeal will continue to grow strongly.

Retailers are increasing their investment in online shopping channels, and suppliers should also be thinking about how their products, marketing communications and supply chains could adapt to this online model.

While the perishable nature of fruit and vegetables create more ‘last-mile logistical challenges’, this can be overcome with customised products that incorporate packaging and logistics solutions to minimise the impacts of product handling.

“However, one of the biggest opportunities that the digital world brings to fruit and vegetable suppliers is in opening up more direct communication channels with their consumers,” Soccio says.

“For example, suppliers can provide fun, easy and enjoyable serving suggestions — all with the view to translate this into purchasing decisions, whether the consumers are commuting, out shopping or transacting in the comfort of their own home.”

Image credit: ©Art Allianz/Dollar Photo Club