While dry grocery remained the top-selling category, accounting for 38% of sales last year, fresh departments collectively contributed 42%. That includes meat and produce, each accounting for 11% of sales, dairy at 8%, deli meats at 4%, fresh prepared and in-store baked goods at 3%, and seafood at 2%, according to FMI.
Based on Circana data cited in the reportMeat sales led the produce sector at $86 billion, followed by produce at $76 billion. Although meat sales declined 0.8% from a year ago and 2.8% in unit sales, the category grew 25 percentage points from four years ago. Produce sales increased 1.5% from a year ago, and unit sales remained flat over the same period, growing 5.6% from four years ago.
It’s no surprise that price and quality are the drivers of fresh produce sales, but the report highlights the importance of promotions tied to maturity and appearance, particularly for fresh produce. Promotions, price comparisons and channel switching (a strategy that encourages consumers to engage with retailers’ digital platforms) are particularly important to meat shoppers, the report says.
Consumers who are cooking more at home also continue to look for convenient options, further incentivizing retailers to expand their grab-and-go offerings, which increased by 79%, followed by fresh produce, with a 44% increase.
Fresh foods dominate online grocery shopping, accounting for 41% of total retail grocery sales in 2023. That’s slightly behind dry groceries at 43%, but significantly ahead of the frozen food category at 8%.
Food suppliers spend more on technology than retailers
To optimize in-store operations and deliver consistent customer service, the grocery retail industry is increasingly turning to technology. There has been a significant increase in the adoption of technology for inventory management, demand management, and fresh produce planning, with 40% of retailers currently using these solutions, up from just 20% the previous year. An additional 15% plan to implement such technologies in the future.
Artificial intelligence is rapidly being adopted across the food industry, with more than 40% of retailers and nearly 70% of suppliers reporting using AI for various applications.
Beyond fresh produce management, the industry is exploring a wide range of technology applications to improve workforce efficiency, e-commerce capabilities, data analytics, customer experience and product assortment, among others. Last year, grocery retailers spent about 0.9% of their total sales on technology. Despite significant investments—more than $10 billion across the grocery industry—retailers have reported mixed reactions to the impact these technologies are having on their businesses.
However, 68% of food retailers plan to increase their technology spending this year, with food suppliers spending 1.9% more on technology than food retailers, particularly on data analytics, and 85% of suppliers planning to increase their investments this year.
