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[14 comments]

What consumer trends will shape food retailing in 2014?

January 14, 2014

Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.

Millennials, health-conscious shoppers and a shift in consumer palates set the stage for what's to come in the food world this year, according to 2014 predictions from Phil Lempert, the well-known Supermarket Guru.

Mr. Lempert sees the following 10 trends in the grocery space gaining attention from consumers in 2014:

1. The Emergence of the IndieWoman: Almost 31 million strong, these women are 27 and older, live alone and have no children. Time is of the essence for the IndieWoman, so look for more brands to cater to this powerful consumer who wants to cook, but might not have the time for a homemade meal every night.

2. Better-for-You Snacking: Look for supermarkets to replace traditional higher-sugar, higher-fat snacks at the checkout with better-for-you on-the-go offerings.

3. Brands Reach Consumers Locally Through Cause Initiatives: A survey recently conducted by ConAgra Foods found that 62 percent of consumers appreciate and want to support companies that donate to important social causes. Look for food brands to increasingly focus on community outreach.

4. Click to Cook: For the sake of convenience and saving time, people will begin to rely more on their mobile phones when grocery shopping. In a recent online ConAgra Foods survey, one third of consumers reported using their mobile phone while at the grocery store, most often to refer to shopping lists and recipes.

5. Supermarkets — The New Culinary Schools: Grocery stores are beginning to offer services such as "community cooking centers" where shoppers collaborate and learn from each other. These social environments are the perfect place for the aging Millennial population as they are a group that likes to cook, but doesn't necessarily have the skills to make elaborate meals at home.

6. The Retailer Becomes the Brand: Consumers have become increasingly loyal to their preferred retailer and its products. No longer will private brands just emulate national brand products, but consumers will see more private brands creating new products of their own.

7. Rise and Shine — The New Way to Start Your Day: To live a healthy lifestyle without compromising taste and indulgence, consumers are looking more at foods like eggs, meats, and Greek yogurt, as well as whole grain products, for their breakfast, Mintel reports.

8. Packaging Evolves to Share More with Consumers: Beyond learning more about an ingredient or health claim, using an app on a mobile device might be used to tell where the ingredients come from, who prepared the food, the company's history and even offer other customer reviews and ratings.

9. Millennials Make the Supermarket Social: The next evolution will be "click to buy" for consumers looking to purchase ingredients for a recipe on Pinterest or other social media platforms.

10. International Restaurant Flavors at Home: The surge of Latino and Asian populations, along with growing consumer interest in adding more flavor and variety to mealtime, will fuel this trend.

Discussion Questions:

What do you see as some of the stronger grocery trends gaining momentum in 2014? Which of the predictions mentioned in the article do you see as most challenging for food retailers to capitalize on?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Do you expect 2014 food retailing to experience less or greater change than in 2013?

Comments:

Great list!

Some of the stronger trends include the Millennial shopper (mobile, social), the continued drive for healthier foods and transparent sourcing, to turning food shopping to an immersive experience.

Most challenging will be transforming and connecting the in-store shopping experience with digital shopping. And catching up with changing demand in tastes and sourcing organic & non-GMO foods.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

Phil Lempert has earned his stripes as a "Supermarket Guru." Each of these points are well stated and positioned. And, each has an added link or two, e.g. U.S. consumers of all ethnic backgrounds will discover and appreciate the joys of Pan-Asian or Pan-Hispanic cooking; Health foods will emphasize "Gluten Free" and "Trans Fat Free" more and more.

The impact for food retailers will offer positive opportunities, as well as some challenges. With consumer demand rising in some new areas, shelf space will become a battle ground. The rise of Greek yogurt has carried over to take space from certain cheese plan-o-grams. That has prompted certain chains, like Kroger, to expand space for cheese in new areas - Murray's Cheese Mart, for example.

It's not only the Millennial population that is using Pinterest and other social media. The Prosper Media Behaviors & Influence (MBI) Study indicates that Generation X, smaller in size, but they have children, are catching up with the Millennial Generation on social media.

Smart manufactures and retailers will be listening closely to the consumer. Knowing where she/he is going next will position them to make better decisions in capturing share in the grocery aisle.

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Roger Saunders, Managing Director, Prosper Business Development

Everything that Phil says makes great sense, and things continue to change, so we need to prepare for that.

I would like to also add my two cents worth in regards to the types of consumers we serve, and I am speaking about the poor communities which dot the landscape across the country. If 80-85% of your county is poor, or retired, everything you do needs to be targeted to bringing tremendous value, or you'll be hearing crickets chirping inside your store. I know you have read this from me before, but the truth is that price is the absolute king around here, and unless you know how to wheel and deal, all the healthy foods you carry will not excite anyone, unless you accept lower margins on everything you sell.

Yes I totally get it on the new trends, and yes we need to get better at how we run our stores, but I have never seen in my 50+ years in this business, the devastation of the rust belt we live in, and the race to the bottom is not what I aspire to. Regional vendors know this, and the trend in 2014 and beyond for me is to keep making the relationships with these suppliers strong, as they appreciate my business, and allow me to compete against the big boys quite well.

I will stay focused, attend my NGA each year, and learn from the mistakes of the past, but I know where my bread is buttered, and we will keep bringing in the deals, and offer our great service to keep my customers as happy as possible.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

Phil has captured some very relevant trends. I would add the following: better-for-you products beyond snacking as Millennials age and younger parents focus on childhood obesity; sustainability in sourcing, packaging and disposability as the circular economy movement migrates from Europe to the US; and finally, local sourcing.

The role of food retailers when it comes to sustainability will continue to be a challenge. In addition, the struggle will continue for food retailers to be perceived as the community wellness champions.

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Richard J. George, Ph.D., Professor of Food Marketing, Haub School of Business, Saint Joseph's University

As consumers feel the pressure of less time available it will be more challenging to get them to spend more time with food retailers...in person. I can visualize "community cooking centers" on line, but not in the store.

All the trends that focus on the use of mobile are beginning to make more sense to me as the retailers promote their offerings via mobile in the store. There's a bit of Pavlov in all of this. But it's food. It's okay if we drool.

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Joan Treistman, President, The Treistman Group LLC

Wow. After you read Phil Lempert's succinct and prescient forecasts - he is the best at this - read Tony Orlando's comments. "The race to the bottom" (Tony's phrase) has decimated the department store channel. Could the same happen to grocery? You bet, if enough options for people to buy food gain critical mass. One way to succeed in the new bifurcated mass market is by offering stores to both segments described by Tony and Phil. Roundy's seems to be on to this strategy.

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Dan Raftery, President, Raftery Resource Network Inc.

Shoppers want to support organizations that give back to causes and to their local communities. This will continue to pick up steam as time goes on. Tied with the retailer as the brand, this could be a powerful combination.

Big challenge will be to continue to connect digital/social/mobile with the store and with the shopping experience. And it is more than just the Millennials...the expectation is becoming that this is a part of doing business today and is only going to accelerate.

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Brian Numainville, Principal, The Retail Feedback Group

I am not going to be the one to argue that any of Phil's trends are not viable and likely not to be on the radar screen this year for retailers and consumers. However, in my opinion, anything related to mobile apps and related content are going to continue to find limited audiences, even among Millennials.

The reason is that most (not all) of the mobile apps are not comprehensive in their approach and actually represent additional steps for the consumer, rather than making their trip more efficient.

Until we as an industry crack the code on how to communicate more effectively with the consumer in-store and at the moment of decision, shoppers will continue to keep their smart phones in their pocket as they shop. It might be the only time all day they do so!

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Mark Heckman, Principal, Mark Heckman Consulting

This list makes noise like a nerf windchime. I'm liking Phil's items #2 and #7. And maybe #6. But the others are just jingoistic hoo-haw to fill out a list of ten for the purpose of getting published. Why not seven? Why not a dozen?

It seems today that all retail comments which include smartphone shopping are automatically given credence irrespective of their truth. It's trendy. But trends move slowly in the supermarket bidness.

Here are some bona fide grocery trends really/actually gaining momentum in 2014:

1.) Fresh stuff. More, more timely, and higher quality. Not to be confused with the bogus "locally-grown" fraud, and recognizing that today's transportation services can quickly deliver fresh items to your store from almost anywhere.

2.) Less packaging. Manufacturers are making great efforts to reduce the cardboard and plastic encapsulating their products for sale. But they can do more.

3.) Targeted rewards. Supermarkets are finally using the loyalty software they paid $millions for decades ago (moving slowly) to put a finer edge on their offerings to frequent shoppers.

4.) Store-prepared. Soups, salads, and entrees appear everywhere throughout the store, and would not be there unless shoppers were buying the stuff. I wish I could find some really great store-prepared chicken enchiladas, though.

5.) Health advisories. More, and more clear and precise, through improved labeling. Plain talk replaces label lists in mice type.

6.) Green, sustainable, and locally-grown. Like other bogus terms such as "all natural" and "organic," "green," "sustainable," and "locally-grown" are gaining traction despite their lacking definition and proven positive results. B-b-but, despite their wispy nature, these terms are still "stronger grocery trends."

What, only six? I could go on, and so could other commentators here.

In the 60s I rushed home from school to watch the Pony contest on American Bandstand. Not to be confused with the Mashed Potato contest. Those were trends, like the Twist, which evolved social dancing from touching to individual gyrating. I loved it, but they were just trends.

The main trend for supermarkets in 2014 should be baking the cake before icing it. Back to basics.

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

Sounds like the predictions for 2013; and 2012 and ... (In other words, safe rather than imaginative; but that's okay, better safe than wrong.)

Sadly, one trend we'll almost definitely see will be sharply reduced output from California (and what you do see will be at greatly elevated prices): with rainfall amounts/water allotments down 80-90% in many cases, the Golden State's biggest export looks to be dust...This will be everyone's opportunity to learn how to pronounce Chile correctly.

'notcom'

Flexitarianism. Backing off of the beef and chunking the chicken one or more times per week. Thus the increased popularity of meat substitutes and accelerated investment and innovation dedicated to developing them (just ask Bill Gates). As the reasons to go meatless increase, meatless moves are easier to rationalize. Health, environment, animal welfare, food supply safety...when two or more converge, people make different choices. And they are.

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Carol Spieckerman, President, newmarketbuilders

When is the insect protein finally going to hit stateside?

In all seriousness, I am greatly concerned by Tony's comments. Watching a TV show where people are paying several hundred dollars for a multiple course tasting menu of nitrogen frozen xxxxx, and then hearing his community issues speaks to the hi-lo issue in food like no other. Keep up the good fight Tony!

I also encourage everyone to read Anything that Moves. Just a glimpse into various food cultures in the US.

'Stanaggie'

The piece doesn't mention store layout and design as being affected by these shifts in buyer behavior, but that can really impact sales. I've blogged about this here.

So the mandate on both knowing your consumers and shoppers seems pretty important. This was a theme at last year's Food Industry Summit at St. Joseph's University and I summarized it here.

I do agree that the mobile opportunity to connect the shopper to recipes is a great way of tapping into health-conscious consumer preferences. For the retailer and supplier partners it's also an opportunity to focus on category growth strategies by promoting complementary products within a single shopper marketing program. I've mentioned this here.

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Gib Bassett, Global Program Director for Consumer Goods, Teradata Corp.

The strongest trends will not be any of the ten listed, rather a combination of the listed trends that overlap. For instance, healthier foods, Millennials, packaging, all point towards a fresh food trend at the local grocer and not necessarily at the deli counter. Grocers will have to expand their fresh produce section and bring butchers back to the store.

None of the mentioned trends will be challenging to the store; the real challenge will be in management accepting trends and evolution in demographics from their customers. The core consumer as it existed a decade ago will be completely changed.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

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