What You Need to Know About The Fresh Market’s Strategy & Growth
It seems as if everyone wants a piece of the food business. From delivery platforms like Instacart to Amazon to traditional supermarkets the grocery industry has never been more crowded or competitive. Finding a way to standout is not an easy task but The Fresh Market has carved out its own niche with a hyper focus on fresh foods and a level of customer service that keeps customers coming back for more. If you are curious about The Fresh Market and want to learn why it was voted America’s Best supermarket by USA Today then consider these six factors.
1. The Fresh Market first became a public company in 2010 but it was taken private by Apollo Global Management in 2016 for $1.4 billion. The transaction saddled The Fresh Market with nearly a billion dollars in debt. To help refinance this debt as well as allow its private equity owners to cash out The Fresh Market went public last year.
2. The Fresh Market has benefited from the COVID-19 pandemic forcing consumers to eat more at home. This is reflected in The Fresh Market’s sales surging, up 24% in 2020 to reach $1.89 billion. This positive trend continued in 2021 with The Fresh Market’s sales up 9.4% in the first 13 weeks of 2021 to reach $489.5 million.
3. With an average store size of 21,000 sq. ft The Fresh Market is significantly smaller than traditional supermarkets that are typically 60,000 sq. ft. This allows The Fresh Market to locate its stores closer to the high income consumers, with a household income of $75,000+ it targets that may live in high density areas.
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4. The Fresh Market as the name suggests differentiates itself with its fresh food offering. Approximately 70% of its assortment is fresh food compared with the average food retailer whose assortment is 35% fresh. The Fresh Market claims it can get products from farm to store in as little as 14 days. "Rather than having fruit picked just before it is fully ripe and then shipped on a boat, we will pay the extra freight cost to have the fruit flown in, so it is in our stores in the shortest amount of time after harvest," said Dennis Payne, The Fresh Market’s senior category manager of produce retail.
The Fresh Market also sells three times the variety of produce compared to other grocery stores. “The Fresh Market provides high-quality, fresh foods and difficult-to-find items in a small, intimate store footprint with high-touch guest service and exceptional cleanliness,” said Renaissance Capital said in a research note.
5. Like many grocers The Fresh Market shifted its focus to more prepared foods as consumers changed their eating habits during the pandemic. Its meal program includes: “Market Meal Kits (provides ingredients and recipes for 20-minute one-pan preparation, perfect for convenience-focused guests looking for daily meal ideas), Little Big Meals ($25 offering to feed a family of four, offering a high-quality meal at an exceptional value), and the special dinner programs (restaurant quality dinner programs especially highlighting our superior meat and seafood offerings).”
These programs have resonated well with consumers with sales of The Fresh Market’s Market Meal Kits up by 45% in 2020 and up by 27% in the first quarter of 2021. The meal kit trend should continue as a survey by YouGov found that consumers plan to maintain these eating habits once the pandemic is over. The Fresh Market also sees meal kits as a way to increase basket sizes.
6. The Fresh Market is a customer favourite placing first in a USA Today ranking of the best supermarkets in America which considers which supermarkets have the best value, selection and service. The grocer’s focus on customer service can be seen in the small details like how customers are treated when they pick up orders curbside. Speaking about The Fresh Market’s curbside pickup program vice president of operations Brian Johnson said "we have added special touches, such as bringing you a bottle of water on a hot day, or a banana or clementine for your children."
The Fresh Market also has a sampling program which it pairs with curbside pickup where it gives chocolate samples to customers. For an added touch The Fresh Market also places handwritten thank you notes into shopping bags. These efforts have given The Fresh Market a loyal following with 10% of its customers generating nearly 60% of its revenue in 2020.