A guide to improving FRESH CATEGORY performance

10 Steps to WIN in FRESH is the

latest brochure in our retail series...
....with focus on fresh food categories
OK but what's new?
Adressing ALL challenges of fresh categories
IN ONE comprehensive approach
Complex value chain/supplier structure
Increasing consumer demand differentiation
Rising health and food safety requirements
...

Strategic and customer driven method

Alternative supplier relationship models
Robust analytical tools and benchmarks

A guide to improving FRESH CATEGORY performance

10 STEPS TO WIN in FRESH | A.T. Kearney

Sales: 4 - 6%
Net Margin: Up to 12%

Context
Modern grocery retail is all about fresh food. In recent years many retailers
have reinvented their format strategy to attract consumers with a broader fresh
assortment and the design of more appealing in-store presentations. However,
due to a complex value chain and supplier structure as well as volatile commodity
prices, retailers struggle with assessing the true profitability of new concepts.
Trends such as increasing consumer demand differentiation, continuously higher
food safety requirements and retro-traceability of fresh products place another
burden on implementation.
As a starting point, clear strategic positioning is essential to define the
playground on which to compete for the heart of consumers: lower prices,
better service, premium quality (freshness, variety and visual appeal), and/or
convenience of the assortment. The right value chain and buying capabilities
are a prerequisite to implement the defined strategy.
10 Steps to Win in Fresh, a holistic approach developed by A.T. Kearney
in projects on multiple fresh categories, enables retailers to fully exploit the
potential value by working equally hard on top line growth and bottom
line efficiency. Recent projects around the world have achieved category sales
increases of 4 6% and/or net margin improvements of up to 12%.

10 STEPS TO WIN in FRESH | A.T. Kearney

10 Steps
FOUNDATION steps

UNDERSTAND the full value chain dynamics of your fresh category

DEFINE the strategy and role of your fresh category

TOP LINE steps

TAILOR in-store operations to strategy requirements

CREATE a coherent and invigorating fresh brand strategy

INCITE price/quality perception with fresh categories

6
10 STEPS TO WIN in FRESH | A.T. Kearney

OPTIMIZE assortment based on clearly defined criteria

BOTTOM LINE steps

MANAGE shrink cross-functionally

EXTEND make vs. buy decisions by strategic aspects

DIFFERENTIATE sourcing models to segment dynamics

EVALUATE alternative logistics models

10
10 STEPS TO WIN in FRESH | A.T. Kearney

We have recently supported international food

retailers in OPTIMIZING fresh categories

Western European
grocery retailer

Conducted

mainly bottomline optimization in various

fresh categories such as 4th
gamma (convenience) and
poultry; main improvement
levers included:
Assortment
rationalization and
store operations
Adjustment of
specifications to
consumer needs
Order & delivery cycle
optimization
Strategic sourcing
negotiations

4 12%

Improvement
of net margin

10 STEPS TO WIN in FRESH | A.T. Kearney

Northern European
grocery retailer

Developed

strategy for
fresh categories including
meat, fish, poultry and
delicacy / convenience
along entire value chain;
main improvement levers
included:
New in-store concept
and operating model
Development of
coherent brand
architecture
Strategic alliance with
key supplier

+4%

Sales increase

+5%

Improvement
of net margin

Western European
grocery retailer

Conducted

value chain
optimization of fresh
categories (e.g. red meat,
bakery, convenience,
fruit & vegetables) with
clear bottom line focus;
main improvement levers
included:
Adaptation of make
vs. buy models to
category dynamics
Optimization of
logistics / supply chain
management (e.g.
implementation of
cross-dock operations)

2 8%

Improvement
of net margin

WIN in FRESH list of previously

optimized categories

OPTIMIZED by A.T. Kearney

Meat

Fish

Poultry

Cheese

Bread

Dairy

Ready-to-eat convenience
Ready-to-cook convenience
Fruits

Vegetables

Flowers

10 STEPS TO WIN in FRESH | A.T. Kearney

Client Example
A.T. Kearney is a global management consulting firm that uses strategic insight, tailored solutions and a collaborative
working style to help clients achieve sustainable results. Since 1926, we have been trusted advisor on CEO-agenda
issues to the worlds leading corporations across all major industries. A.T. Kearneys offices are located in major
business centers in 38 countries.
AMERICAS

Atlanta | Boston | Chicago | Dallas | Detroit | Mexico City | New York

San Francisco | So Paulo | Toronto | Washington, D.C.

EUROPE

Amsterdam | Berlin | Brussels | Bucharest | Copenhagen | Dsseldorf | Frankfurt

Helsinki | Istanbul | Kiev | Lisbon | Ljubljana | London | Madrid | Milan | Moscow
Munich | Oslo | Paris | Prague | Rome | Stockholm | Stuttgart
Vienna | Warsaw | Zurich

ASIA PACIFIC

Bangkok | Beijing | Hong Kong | Jakarta | Kuala Lumpur | Melbourne | Mumbai

New Delhi | Seoul | Shanghai | Singapore | Sydney | Tokyo

MIDDLE EAST
& AFRICA

Abu Dhabi | Dubai | Johannesburg | Manama | Riyadh

AUTHORS:
Mirko Warschun, is a partner in the firms consumer industries and retail practice.
Based at the Munich office, he can be reached at mirko.warschun@atkearney.com
Geir Olsen, is a partner in the firms consumer industries and retail practice.
Based at the Oslo office, he can be reached at geir.olsen@atkearney.com
Matthias Rucker, is a consultant in the firms consumer industries and retail practice.
Based at the Munich office, he can be reached at matthias.rucker@atkearney.com
Torben Nielsen, is a consultant in the firms consumer industries and retail practice.
Based at the Copenhagen office, he can be reached at torben.nielsen@atkearney.com
The Authors would like to thank A.T. Kearney consultants Marcus Kroth,
Benoit Nachtergaele and Daniel Potok for their valuable contributions to this paper.

Copyright 2011, A.T. Kearney Ltd. All rights reserved. No part of this work may be reproduced in any form without written permission from the copyright holder.
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