Growth Assessment - Adjacent Markets

SITUATION

Traditionally, the center of a grocery store contains packaged goods that are shelf stable while the perimeter of the store contains fresh items including produce, meat and seafood, deli, and bakery items. These fresh items tend to be higher margin items for the stores but much is not packaged, with shelf life being managed by the efficiency of the supply chain and the look of the actual product providing the merchandising. 

Fresh has been growing at a faster rate than other categories since 2010 as projected to grow even faster through 2020. Today, supermarkets are displaying fresh food throughout stores, with shelf space devoted to packaged dry goods declining. Fruits and vegetables are increasingly found wrapped or bagged, and the packaging and merchandising of meats is becoming much more sophisticated. 

PMG SOLUTION

In the face of these dramatic shifts in consumer behavior, PMG was asked by a leading packaging company to investigate opportunities in the perimeter of the grocery store. This was an area in which the client had very little experience and was unfamiliar with distribution, merchandising, pricing, packaging providers, and critical trends. PMG developed a two-phase project that spanned 5 months, moving from an overview of the sector to identification and prioritization of specific opportunities. 

PMG began by developing profiles of the distribution channels for 100 individual items, from farm to retail, and then categorized those items into 34 distinct groups. Out of these 34 groups, 31 specific packaging opportunities were identified and described in detail. Using a fit-attractiveness matrix, and working closely with the client, we prioritized the list and selected nine to pursue in-depth. 

 We conducted a series of in-depth interviews with researchers, engineers, packaging buyers and marketing managers intimately involved with the nine target opportunities, identifying pain points and areas of frustration with current packaging solutions. After further investigation including a high-level patent search, technical feasibility assessment and analysis of likely time horizon for product development, several strategic directions were developed and a path forward outlined for the client.

RESULTS

The client was thrilled with the results of the project, stating that, “we got much more than we originally envisioned. PMG did an outstanding job, delivering everything we wanted and more.” Based on this work, the client decided to move forward aggressively with their market entry strategy, making a large acquisition of one of the companies PMG identified as market leader within 6 months of the project conclusion.