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In fresh-food retailing, quality matters more than price

A McKinsey&Company survey of 23,000 European shoppers reveals specific ways grocers can win in fresh fruits and vegetables, boosting sales by as much as 10 percent even in a flat market.

Quality over price
If you’re a fresh-food retailer in Europe, your apples and bananas better be top-notch. European consumers tend to judge the quality of a retailer’s fresh-produce department based on those two particular fruits. Vegetable preferences are more varied: British shoppers closely inspect the quality of potatoes, whereas courgettes (zucchini) are important for the French. Germans will notice tomatoes the most. For the Swiss, it’s lettuce.

These detailed insights were among those generated in our pan-European benchmarking survey of 23,000 grocery shoppers. We sought to develop an in-depth fact base on the perceived quality of fruits and vegetables sold by food retailers in Europe. We found that, in each of the four countries we surveyed, consumers are satisfied with the fresh-produce department of only a few retailers—underscoring an opportunity for most European grocers to up their game in fresh fruits and vegetables.

How to judge?
But how exactly do consumers judge the quality of fruits and vegetables? And what role does this judgment play in their overall satisfaction with a retailer?

According to our research, quality is the biggest factor in whether a customer will recommend a store’s fresh-produce department to other people. Low prices and frequent promotions matter, too, but not as much as quality. These findings hold true in all four countries surveyed.

This is good news for grocery retailers. Quality improvements in fruits and vegetables require less investment and yield higher returns than retail-price reductions. In our experience, quality-improvement programs in a fresh-produce department can increase the department’s sales by more than 10 percent year on year, even in a flat market. And the benefits don’t end there. Quality improvements also result in more customer traffic and higher sales in the store’s other departments. There’s an undeniable halo effect: if shoppers perceive high quality in the fresh-produce department, their perception of the retailer’s other departments improves as well.

Read more about the research here.

Publication date: 4/26/2018

 


 

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