Retail remains in a rapid change pattern
Jan. 10, 2017
by Donna Berry
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What's in Store is designed to help food industry professionals better understand today's retail world.
CHICAGO — The retail marketplace for food and beverages is undergoing dramatic changes, according to the International Dairy-Deli-Bakery Association’s (IDDBA), Madison, Wisconsin, recently released What’s in Store 2018, the 32nd installment of the association’s annual report containing data on retail/market trends, growth and category changes shaping the food industry. The secondary research report is developed through interviews with industry experts and sourcing of third-party data and trends.
“The shopper landscape is continuously shifting and What’s in Store is designed to help food industry professionals better understand today’s retail world,” said Jeremy Johnson, vice president of education at IDDBA and co-managing editor of the report. “Consumer trends give insights on how to engage with shoppers’ desires, lifestyles and trip missions, which are critical toward ensuring a prominent role for fresh categories in today’s changing food roadmap.”
Eric Richard, education coordinator at the IDDBA, said, “Just as retail channels are continually evolving, so too are the shoppers who frequent them. Today’s consumers represent a variety of generational and ethnic demographics, and their palates and dining preferences are shining light into new tastes, flavors and eating occasions. Grocers have the potential to be at the forefront of eating innovation and creation.”
Food Business News, (sister publication to MEAT+POULTRY) spoke with Mary Kay O’Connor, vice president of special projects at the IDDBA, and co-managing editor of the report.
How has grocery shopping changed in the past few years?
O’Connor: It is no longer just about buying food. For today’s shoppers, it’s a destination experience. Retailers are adding more and creative in-store eating areas, more intriguing private label and more local products. Retailers that reflect the communities they serve appeal to today’s shoppers. “Localism” is a dominant theme to help communities feel connected.
Further, in our research we learned that consumer spending appears to be split evenly between preparing meals at home and eating out. This presents retailers with an opportunity to provide food service offerings for at-home dining. It’s no wonder that supermarket prepared foods are the fastest-growing segment of the food service industry.
Mary Kay O'Connor, vice president of special projects, International Dairy-Deli-Bakery Association.
How important are brands to today’s shoppers?
O’Connor: Private label sales appear to have slowed due in part to an improved economy. But interestingly, data shows that younger shoppers are more likely to purchase store brands to save money. At the same time, younger shoppers, namely millennials, believe that liking the brand is as important as liking the food. Complete transparency has become a key factor for building brand loyalty. Millennials are more likely to purchase brands that are socially responsible, support charitable organizations and are authentic to ethnic heritage.
What’s trending in retail packaged foods?
O’Connor: Almost 45 percent of millennials identify as ethnic or multicultural, making this generation the most diverse in US history, with food purchasing decisions no longer based on their lineage or familial customs. Multiculturalism is growing and it’s changing the way food retailers and manufacturers look at consumer buying behaviors. The result is a blurring of lines separating ethnic consumer demographics. Retailers in tune with consumer shopping patterns can provide innovative solutions to appeal to the changing palates of today’s shoppers.
Consumers are attracted to brands that are socially responsible and support charitable organizations. It pays for a brand to be transparent.
For example, research shows that the appeal of American cuisine, as well as Southern cooking, tapers with age. Younger generations find Indian and Southeast Asian cuisine especially appealing, and they don’t necessarily consider it to be ethnic or foreign, as older generations often do.
What else stands out about millennials, and their successor, Generation Z?
O’Connor: There are four generations — silent, boomers, X and millennials — in the aisle with a fifth — Z — close behind. If we see millennials as being multicultural, just wait with Gen Z. Research shows that very soon more than half of all U.S. households will be considered multicultural. With this comes a curiosity for adventurous cuisines, which they learn about from social media. Technology plays a vital role for Gen Z, even more so than millennials. The good news for retailers is that despite being the first generation not knowing a world without cellular phones, brick-and-mortar stores play an important role in Gen Z’s shopping habits, with about two-thirds shopping them most of the time. It’s all about the experience.
Retailers need to step up, however, as currently less than 20 percent are delivering the experience Gen Z wants. Retailers should also be aware that millennials are more likely than other generations to incorporate a customized eating approach, such as meal planning, adhering to paleo and other diets of the like, and purchasing local or environmentally friendly products. We expect Gen Z to be the same.