Kroger Co. not worried by increased competition in fresh foods segment

Nielsen predicts grocers will lose fresh share

CINCINNATI - A new Nielsen report says grocery stores will lose "fresh food" market share in the next three years to supercenters and club stores.

The fresh food category, including meat, seafood, bakery, deli and produce, now accounts for 29 percent of grocery revenue. It's also an important traffic generator for U.S. grocery stores, according to a March 18 report by Nielsen Perishables Group.

But the grocery industry's dominance in fresh foods is likely to be challenged by warehouse stores and mass merchandisers. Nielsen predicts grocers' share of consumer dollars spent on fresh foods will fall 2 percentage points to 64 percent by 2016. At the same time, supercenters will gain one point to 15 percent and warehouse clubs will rise two points to 12 percent.

"Fresh is becoming more complex with greater variety in products and package sizes, more private label/brand options and increased value-added products," said Bruce Axtman, president of Nielsen Perishables Group. His advice for grocers: "Understand your shoppers' generational and health needs to tailor offerings and implement programs that best meet their changing demands."

Kroger Co. spokeswoman Rachael Betzler said the company's new pricing strategy announced in early February includes lower prices on hundreds of fresh food items.

"We are very aggressively pricing our produce," said Betzler. Nature's Markets organic products have also been reduced.

Kroger announced price reductions on about 3,500 items in February and an end to double-manufacturer coupons. Seven weeks after the announcement, Betzler said Kroger has seen growth in the number of local households who shop regularly in its stores. She declined to provide additional details.

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