Sep 30, 20243 min read
Nonfoods basket

By: Tom Duffy, Senior Advisor, Nonfoods Community Development, FMI

As the battle for the food dollar rages on, savvy grocery retailers realize a treasure trove of untapped potential is waiting for them in their nonfoods aisles. While food draws shoppers through the doors, data shows that retailers who optimize their nonfoods categories are reaping significant rewards. Combining food and nonfoods items creates a powerful interaction beneficial for both retailers and consumers.

At FMI's recent nonfoods digital seminar, Gateway to Total Store Growth: Unlocking Incremental Growth with Your Food and Nonfoods Strategies, we learned nonfoods are included in just 25% of grocery trips, yet they nearly double the basket value from $31.90 to $61.48. The secret sauce? Categories like home care can boost it to $75 or more.

Nonfoods Aisles as Strategic Gold Mines

Grocery stores currently only capture eight percent of total nonfoods sales, though nonfoods makes up 25% of their revenue. So where are all those nonfoods dollars going? Increasingly, they're ending up in the hands of competitors — like online shopping, club stores and dollar chains.

This leakage affects more than just nonfoods sales. The data shows that consumers loyal to a grocery store for their nonfoods purchases also spend significantly more on food items, so losing that loyalty can lead to losing food sales too.

Strategies for Growing Nonfoods Sales

So how can grocers close these gaps and reclaim their rightful share of the nonfoods market? Panel participants from Circana and The Clorox Company suggest a three-pronged approach:

  • Disrupt the leakage patterns. Make your nonfoods offerings impossible to ignore, whether that's through prominent in-store displays, targeted promotions or strategic product placement.
  • Enhance the shopping experience. Ensure your nonfoods aisles are easy to navigate, competitively priced and stocked with the right assortment to meet your customers' needs.
  • Leverage shopper data and insights. Identify new target segments and shopping occasions to better serve and leverage that insight to craft personalized and valuable nonfoods shopping experiences.

Tim Horton from Schnucks shared how they use nonfoods categories to grow customer engagement and create compelling displays that mix food and nonfoods items. They redesigned the front end of their stores to incorporate more nonfoods items, improving customer experience and margins. Schnucks ties nonfoods items to key events and holidays to meet customer needs.

Dan Glei from Food City discussed how they developed a lobby program to feature key nonfoods brands in store lobbies, ensuring competitive pricing and engaging customers. The program has achieved strong growth, and Food City plans to continue these efforts. Their focus is on understanding consumer needs and creating innovative strategies to attract and retain customers.  

The bottom line is this: Grocery's nonfoods aisles represent a massive untapped opportunity. Strategic investments in these categories can drive sales, profits and strengthen the core of their food business. It's time to unlock the hidden potential of nonfoods — the future growth of the entire grocery enterprise may very well depend on it.

Nonfoods

Gateway to Total Store Growth: Unlocking Incremental Growth with Your Food and Nonfoods Strategies is available for learning independently. Listen in, and you will gain further details and insights into:

  • The relationship between consumer loyalty to the grocery channel for nonfoods categories and their loyalty to the channel for core food business.
  • How nonfoods categories are crucial for overall business success, as they influence both nonfoods and food spending.
  • The importance of understanding consumer behavior and creating engaging experiences in nonfoods aisles.
  • The importance of closing leakage occasions in nonfoods categories to drive food sales and overall business success.

Join the next nonfoods FMI Digital Seminar Exploring Nonfoods Shopping Behaviors in Grocery Retail October 15, featuring the release of the new Power of Nonfoods report.

Gateway to Total Store Growth: On-demand      Register for the October Digital Seminar