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[14 comments]

Are nutritional rating systems a market basket killer?

August 27, 2014

A new study by Cornell University Study found that nutrition rating guides in stores led to a sharp decline in sales of "junk food" but only a more marginal gain in healthier items.

The researchers, including Cornell Food and Brand Lab's David Just, PhD, and Brian Wansink PhD, author of the upcoming book, "Slim by Design," studied the sales records of over 150 Hannaford Supermarkets in the northeast between January 2005 and December 2007. They collected data from over 60,000 Guiding Star rated food items. The Guiding Stars System brands items with zero, one, two or three star ratings, with three stars being the most nutritious. The amount of beneficial ingredients, such as vitamins and whole grains, are taken into account along with the amount of innutritious ingredients, such as trans-fat or added sugars.

Researchers found that sales of less healthy foods — such as highly processed snack foods — fell 8.31 percent when branded with a nutrition rating while the percentage of healthy food purchases rose by 1.39 percent. The authors also noticed that the use of the Guiding Stars system led to an overall decline in supermarket sales.

According to lead author John Cawley, PhD, the decline in the sales of the less healthy ("junk") foods was "perhaps the leading catalyst for the trend toward more nutritious food purchases."

Guiding Stars, launched in 2006, is currently found in more than 1,800 supermarkets in North America, including Hannaford, Food Lion, Sweetbay, Homeland, Marsh Supermarkets, B&R and Mar-Val in the U.S., as well as more than 350 Loblaw, Provigo and Provigo Le Marche stores in Quebec and Ontario.

Discussion Questions:

Should grocers expect lower basket sizes as part of the push toward healthier eating? Does it make sense that in-store nutrition ratings labels lead to a much more drastic shift away from unhealthy foods than toward healthy options?

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:

Should grocers expect lower basket sizes with pushes toward healthier eating?

Comments:

As a whole, Americans are overweight. A key to sustainable weight loss is to cut overall calorie intake. One of the fastest ways to do that is to cut snacks.

The nutrition ratings data seem to show that shoppers do in fact cut some unhealthy food purchases when labels are present, but do not necessarily replace them with healthier food choices. Good news for the diet conscious, not-so-good news for store revenue.

To prevent revenue loss, grocery stores might explore options (demos, recipes, adjacencies) of how to engage consumers to create quick, easy meals using healthy food choices.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Not necessarily. Creative food marketers need to develop strategies and accompanying merchandising efforts to take advantage of this trend. While there will be a continued shift away from foods perceived as less healthy, aided by the perfect information provided by engaged consumers and social media, there still is a terrific opportunity for food retailers. How? By positioning themselves as the health and wellness experts, and capitalizing in these consumer preferences.

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

Two thoughts: First, the data is dated and we might well find different results today where the climate for healthier eating is more positive. Second, the group of shoppers that really care about nutritional value remains small. Those people are responding positively to posting of the information in grocery stores, restaurants, etc. For most people, it's a guilt trip, and if my store makes me feel guilty, I'm out of there.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

There's something wrong in the numbers here. On the face of it, there's 6.92 percent unaccounted for. Without going into a deep statistical comparison, some factor is missing. Did people shift food purchases to other retailers that are perceived to have more healthy choices, say a Whole Foods, or does it imply that Americans are cutting back on consumption? It's hard to know, but we do know, that as a whole, consumption is not shrinking and neither are waistlines, so maybe shoppers are buying less "junk food" at the supermarket and buying more at purveyors like McDonalds.

Bottom line: shoppers probably want the nutritional information to at least feel as if they are doing the right thing, so grocers would be smart to oblige. The real wake up call is to mega-processed foods brands. If there's any accuracy in this study, the message to them clearly is to move towards what consumers seem to want.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

If grocers educate consumers about healthy eating, a national rating system could lead to increased sales. It takes time for consumers to unlearn years of unhealthy eating.

Trusted nutritional labels will impact eating habits, and they are much needed. If trusted nutritional ratings are available, consumers will use them. Obesity in America is a national problem.

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Max Goldberg, President, Max Goldberg & Associates

Although I'm not sure of the value of a study that was completed in 2007—a lifetime ago in food retailing—it stands to reason that consumers would cut back on junk food purchases when confronted with new packaging information and a flood of shows and reports in the media saying that we all need to cut back on calories, fat, sugar, salt, processed food, etc. If I ran a supermarket I'd quit worrying so much about declines in center store/processed food and focus more on fresh perimeter sections, especially produce, along with fresh/lean meat and fresh seafood.

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Al McClain, CEO, Founder, RetailWire.com

We as a society over-consume, as shown by the obesity rate.

These ratings make it very easy for consumers to identify the "bad" items and remove them from their shopping basket. Thus they feel better about their shopping and what they are bringing home to eat and feed the family with. However, when looking at what to replace it with, the choices get a little harder. The obvious ones of fresh fruit, vegetables, proteins, etc. are easy. What gets harder is finding foods that meet our lifestyles of being always on-the-go and wanting the prepared foods that are not only healthy but taste good.

Lastly, its been known for years that it's all about calories in vs. calories out. If shoppers and their families are truly trying to lose weight and lead healthier lives, it may truly be about eliminating the non-healthy foods first from their diet without replacement, thus reducing their overall consumption.

It will be up to the food retailer to change with the times and provide those products and services that their consumers want and need in order to maintain and potentially increase their revenues and profits.

Alan Lipson, Retail Industry Marketing Manager, SAS Institute Inc.

As a supermarket owner, there are plenty of choices for consumers today, and yes healthy eating is on the upswing. With incomes falling, and large pockets of poor areas, the price of food is hurting many consumers, who are switching to cheap processed foods to feed their families. The number of consumers in my area are heavily purchasing this food to survive, and I don't see an upswing in healthier options, as it is simply more expensive. The other issue is education, and a lifestyle which promotes almost no activity outside the home, again leading to more obese kids.

I am all for helping people learn how to eat healthier, and teaching nutrition labeling to consumers, especially diabetics and celiac patients. It is critical to help shoppers who need our advice. One more thing—the healthier options must also taste good, or it will be a tough sell, and thankfully the companies are making that happen.

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

I'm approaching this discussion question as a consumer. I watch the buying habits of my kids (19, 21 and 24), my wife and even myself. The habits are based on education: what we read, what we watch on TV and what our experts (doctors, nutritional experts and trainers at our gym) tell us. As a result, we eat healthier. Traditional snack foods, such as chips, cookies, etc., are now treats instead of routine snacks.

It costs more to buy healthy. While we may not snack as much as we used to, I'm not seeing a drop in our grocery spending.

I don't believe we're the typical family, but we are not extreme either. There are enough of us that it does make a difference to the retailers. And, we are not just an isolated group. We're a trend. The healthy shopper is a segment that is growing.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

My concern, as a data provider, is that the rating systems, much like front-of-package label claims, can themselves be misleading, and in some instances can lead to questionable purchases.

For example, NuVal rates Gatorade very low on their scoring system because of the sugar content. But if you need to replenish electrolytes, Gatorade does well.

Furthermore, I have found that quite a few highly-rated items from NuVal, Guiding Stars, Food Flex, etc., are in fact LESS healthy than other items, absent ANY rating (based on nutrition, ingredients, etc.).

And lastly, it's not uncommon for Food Rating Systems to "differ" amongst themselves. That, in large part, can also contribute to confusion.

I agree with those who posted previously about education as a necessity on the part of the grocery store.

Gregg London, Owner, Gregg London Consulting

Boy, I don't know about that. I think consumers are just finally starting to "get" the poor ingredients factor after looking at the results in the form of their own girth, or for younger consumers, at their parents' girth!

Speaking strictly for myself, I buy more impulse stuff at Whole Foods than I ever did at traditional grocers. Have you ever walked past one of their "Chocolate Mountains" or "Cheese Extravaganzas" and not picked up something you totally did not need? Me neither.

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Lee Peterson, EVP Creative Services, WD Partners

Perhaps in this early-stage sea change among consumers who are becoming accustomed to the benefits of eating better and avoiding unhealthy foods, market baskets may decline slightly. But I believe that merchants will discover new ways to support and foster relationships with their customers that over time will boost market baskets significantly ... while nurturing loyalty.

Retailers that embrace this evolution of shopping habits and recognize the former "transaction-based" market basket provides no competitive advantage will soon realize that healthy options can be a path to healthy sales and profits.

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Dave Wendland, Vice President, Hamacher Resource Group

This gives smart retailers the ability to move that consumer reduction in "junk foods" percentage spend to other healthier food item categories. I think the marketers are missing that opportunity today. Consumers decide the high fat/high calorie (and good tasting ) items are not what they want in their diet. But healthy replacements are not necessarily getting the placement and promotion they need to be selected as replacements. Many times the potential food replacements are some distance from what they are trying to replace. No reason market basket size has to be reduced if more healthy options including prepared foods, healthy snacks, prepped fruit, etc. receive the proper placement and promotion in retail stores.

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Larry Negrich, Vice President, Marketing, nGage Labs

No. People haven't been reading these for years. America does not care about its diet, only what tastes good, and what they are familiar with (vis a vis advertising).

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Kai Clarke, CEO, American Retail Consultants

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