How to fully capitalize on fresh, frozen food investments
New technologies are making it easy for food retailers to completely eliminate their use of HFC-refrigerants by instead utilizing natural refrigerants.
With fresh and frozen foods among the most desirable and lucrative items in the store, it’s clear that refrigeration and freezing systems will always be needed. However, grocers and food retail brands must start embracing new approaches in the face of climate change. This is because these systems remain tethered to antiquated compressor technology dating back to the 1700s, which relies on global warming-causing hydrofluorocarbons (HFCs).
A single supermarket today emits about 875 pounds of HFCs annually, as outlined by the Environmental Investigation Agency (EIA), London, which is the emissions equivalent of more than 300 cars. Fortunately, there are many reasons for food retailers to make a change beyond environmental impact, from appealing to sustainability-minded customers to new sales opportunities.
The hottest in-store commodities are cold
According to research from Nielsen, fresh foods are driving 49% of dollar growth across the consumer goods category – accounting for $177 billion in sales. Similarly, data from the American Frozen Food Institute (AFFI), Arlington, Va., and the Food Marketing Institute (FMI), Arlington, Va., found that frozen food purchases were on the rise in 2018, outpacing total center-store food product purchases. Both studies illustrate the importance of these food categories as high-margin items crucial to driving return on investment. As such, maximizing sales on fresh and frozen foods can make a significant impact on a food retailer’s bottom line.
These items are also of particular importance to retailers vying against e-commerce players that are slowly staking claim to non-perishable goods. In fact, research from eMarketer, New York, shows that online food and beverage sales in the United States will reach $19 billion in 2019, indicating that many consumers are starting to order more products online rather than set foot in a store.
This could be a troubling sign for brick-and-mortar retailers, if not for fresh and frozen goods. Unlike non-perishable products, research shows that only 37% of consumers are confident or very confident that a retailer can keep fresh food at the right temperature during delivery. Many consumers also remain concerned about the environmental impacts of fresh and frozen meal delivery, with research from Phononic, Durham, N.C., showing that 65% of consumers feel these services cause too much packaging waste. Until e-commerce players can gain consumer confidence in last-mile delivery of temperature-sensitive items and quell concerns about packaging, shoppers will continue to flock to brick-and-mortar locations.
Differentiating through sustainability
A whopping 73% of consumers gravitate to brands that care about the environment, as outlined in another Phononic study, and these considerations go beyond what brands shoppers buy; they also influence what stores they’ll visit. Increasingly, environmentally-conscious shoppers are prioritizing retailers that demonstrate tangible progress in reducing emissions, especially as it relates to HFCs, which are said to be thousands of times more potent than carbon dioxide.
According to EIA, high global warming potential (GWP) refrigerants, which exist across 38,000-plus U.S. supermarkets as a result of their refrigerators and freezers, are producing up to 45 million metric tons of CO2 equivalent each year. With numbers like this, it’s easy to see why consumers are factoring this into their purchasing decisions. Reinforcing this further is the fact that many preeminent climate organizations claim refrigeration management to be the No. 1 solution to global warming.
Fortunately, new technologies are making it easy for food retailers to completely eliminate their use of HFC-refrigerants by instead utilizing natural refrigerants, and many grocers are already on board. Companies such as Aldi, Whole Foods, Target, Sprouts Farmers Market and Ahold Delhaize have all taken significant steps to shift their refrigeration systems to HFC-free options, according to EIA analysis, supporting third party claims that it the best long-term solution for the planet.
The best of all worlds
Among the most promising HFC-eliminating solutions are those enabled by solid-state cooling. Based on semiconductor technology, solid-state solutions remove the need for a compressor in favor of a tiny chip that powers a system that uses only low-pressure CO2 and water to cool and freeze. This offers considerable benefits over alternative strategies like HFOs and HFC-HFO blends, which are said to have a lower global warming impact, as it eliminates the need for chemical refrigerants altogether. Eliminating the use of chemical refrigerants in favor of a fully natural approach enables grocers to adopt a solution that will be viable for decades, regardless of how refrigerant legislation may change.
Furthermore, what the technology drives in sustainability, it matches in profitability through “freedom of placement.” This is in stark contrast to traditional refrigerators and freezers, which are relegated to the back and perimeter of the retail environment due to their power needs and heat output. Solid-state solutions do not require special power drops, and because they do not incorporate a compressor, they reject heat at a much lower temperature, only a few degrees above ambient, and will not damage any surrounding product. These benefits make it possible to design solid-state units in a variety of different sizes and form factors. Together, these features provide unmatched versatility and make it possible to put the units and coveted fresh and frozen goods anywhere in the store, from mid-aisle and end-cap displays to checkout counters.
This placement aspect is having a remarkable impact at checkout, an area of the store that has long been dominated by products like candy bars. Now, retailers have the opportunity to maximize sales for in-demand products, like pre-prepared meal kits and single-serve ice cream, right at the register for the first time ever. In doing so, retailers can fully capitalize on the impulse buy. What’s more, 59% of consumers surveyed in another Phononic study said they would buy more at the checkout line if there were healthier options, while 46% say grocery stores should have more refrigerated and/or frozen options at checkout.
The need for sustainable cooling is indisputable, but who said you can’t drive sales and give your shoppers a better experience on your way to achieving it? Now that’s a true win-win.