In Battle For Supermarket Shelf Space, Big Brands Losing Ground To Fresh Food

Image courtesy of Nicholas Eckhart

For decades, your typical supermarket had one wall of produce,  and a corner deli counter, with the core of the building given over to boxed, canned, and bottled products from recognizable brands. But as grocery stores revamp stores to attract shoppers looking for fresher food, companies like Kraft, Mondelez, and Kellogg are losing ground.

The Wall Street Journal reports that a number of supermarkets and other food-selling retailers, like CVS, have redesigned or created new stores with less space for pre-packaged foods and more square-footage given over to in-store restaurants and freshly prepared meals.

For example, ShopRite and CVS, among others, have said they are creating new stores that have cut down on the space for pre-packaged foods and more area for in-store restaurants and fresh prepared meals.

Despite a love for pre-made and whole foods, consumers are’t completely leaving the middle aisles — and the pre-packaged foods — behind. But instead of grabbing a brand from a big company, they’re reaching for local or stores brands, the WSJ reports.

Theses shifts are starting to show as the packaged food industry is beginning to see a dip in sales. In fact, the sales volume for pre-packaged food and beverages fell 0.4% in the first quarter of 2017, the WSJ reports, citing a Nielsen report.

That’s a contrast to the gains made in other grocery areas: fresh meat sales grew 1.7%, produce grew 1.9%, and deli-prepared foods increased 4%.

The decrease in sales is expected to be reflected in Mondelez, Kraft, and Kellogg’s upcoming sales reports, the WSJ reports.

It isn’t just consumers’ changing preferences that have hurt bottom lines, the WSJ notes, adding that an excess of meat and dairy products has lowered costs for consumers, prompting them to go fresh over packaged.

To ease this issue, some retailers — including Walmart — are asking brands to lower prices to bring in customers.

Others are working with food industry biggies to revamp the middle of stores to make them more attractive to shoppers.