Supermarkets pushing fresh food boundaries

IT'S tough to get ahead in the grocery business today. Shoppers are disloyal, discounters create mounting price pressures and customers demand more in quality and service.

This drama is playing out in many countries, but we decided to take a closer look at the situation in Australia, where we surveyed more than 2,500 supermarket shoppers. Our findings were unsettling: More than 80 per cent of respondents told us they routinely cross-shop and spend almost 40 per cent of their grocery budgets outside of their primary supermarkets.

To win shoppers, grocers need to lower prices while raising quality and service, and they need to adapt costs to fuel these investments. But earning customer loyalty also requires a differentiated proposition, beyond price - and all signs point to fresh food. In our survey, high-quality fresh food ranked at the top, tied with price, as the most important criterion for choosing a grocery store. Fresh food sales have grown 2.5 times faster than sales of dry groceries in Australia.