Will Millennials abandon traditional grocers?

Discussion
Photo: RetailWire
Oct 20, 2016

Denise Leathers

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.

Research shows that Millennials, who recently surpassed Boomers as the largest population cohort, are unfamiliar with many of food’s legacy brands that were regularly advertised on TV to Boomers. Says Don Stuart, managing partner at Cadent Consulting Group. “There’s this dependence by retailers on brands that are really out of step with the largest segment of the population, which is pretty scary.”

Indeed, Millennials, who tend to be less brand-conscious and more price-conscious than other consumers, are all about attributes, and natural and healthy top the list. That holds an advantage for perishables and points to a need for brands to play up better-for-you attributes, such as organic.

Yes, Millennials are on a budget, adds Bob Shaw, president and CEO of Concentric Marketing, “But they’re more about value, not cheapness, and are willing to pay for quality when they actually see it.”

“Millennials also love unique things,” reports Mr. Shaw, about the generation often described as “adventurous eaters.” He suggests retailers add a little excitement to their assortments. Since Millennials grew eating ethnic food, retailers might try merchandising ethnic frozen meals alongside conventional frozen meals, not in a separate section. Same goes for natural and organic fare. Convenient meal solutions and semi-prepared meals should attract Millennials who cook less than previous generations.

It sounds a little silly but a warmer, less sterile atmosphere wouldn’t hurt either. For example, Minnesota’s Lunds & Byerlys puts its frozen aisle in the middle of the store — under a chandelier, no less — which makes frozen more of a destination section than an afterthought, reports Mr. Stuart.

Since Millennials are always on their phones in-store — comparing prices, looking up nutritional information or searching Pinterest for recipes — Jon Hauptman, partner at Willard Bishop, believes digital offers and coupons are more likely to attract this shopper segment than traditional paper coupons or the paper circular.

Frozen & Refrigerated Buyer October 2016

DISCUSSION QUESTIONS: Are Millennials’ grocery needs and overall shopping habits working against traditional grocers and the legacy brands they stock? What merchandising and selection adjustments would you recommend to grocers looking to win with Millennials?

Braintrust
"As Millennials become the largest shopper segment, traditional grocers will understand their buying habits and continue to adjust their assortments."
"Our research — unlike what’s stated above — showed that Millennials ARE brand conscious. They may not be as brand loyal as other generations."
"Millennials may be leading the exodus from traditional supermarkets, but they are certainly not the only cohort group that is curtailing their use..."

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17 Comments on "Will Millennials abandon traditional grocers?"

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Tom Redd
BrainTrust

It’s working well at Kroger’s Fry’s division in Arizona. The main Fry’s stores have a bar and Starbucks and aisles are arranged with a strong push towards unique foods from many cultures. I was in there last night at 9 p.m. to get powdered sugar for cake icing and passed through many aisles of unique, broadly assorted foods from many cultures. Passed more Millennials than grey hairs.

Lunds in Minnesota is like AJ’s here in Scottsdale. Their prices deliver no real value. People shop there and hope someone they know sees them in the store or leaving. Lunds has a great butcher as does AJ’s. AJ’s also has a full-serve gas station. The value is not there for Millennials. Most products are in smaller packages at higher prices. Too many knick-knacks and cards at AJ’s. Millennials do not have the time for pseudo-luxury. A chandelier — who cares, really?

P.S.: I was also at the Scottsdale Walmart yesterday — more Mercedes, Audis (A6+), Maseratis and Porches than usual. Overload of Cadillac Escalades.

Ralph Jacobson
BrainTrust

I think “traditional” grocers have all the opportunity to continue to capture Millennials’ share of wallet, as most Millennials already shop at those stores, by a wide margin. The innovators in that store segment are taking the successful elements of specialty foods stores and implementing them in their stores. This is a simple but not always easy effort, yet it is showing confidence in the traditional food store market and that it has good growth projections for the future.

Adrian Weidmann
BrainTrust

Millennials are driven by value and transparency. They are not easily seduced by legacy brands. They pride themselves on seeking out different and everything that is unique. Food is no exception. They want to try new foods and new experiences, and traditional grocery retail does not fulfill those aspirations. Creating and presenting recipes with store wayfinding on a mobile device (without using an app!) in order to gather all of the required ingredients may be an interesting experience.

Ross Ely
BrainTrust

Traditional grocers have successfully adapted to meet their shoppers’ changing preferences; for example, shifting from processed foods to natural and organic offerings. As Millennials become the largest shopper segment, traditional grocers will understand their buying habits and continue to adjust their assortments accordingly.

Legacy brands will need to overhaul their products and promotional strategies to appeal to these Millennial shoppers or risk being replaced by more forward-looking brands.

Sterling Hawkins
BrainTrust

I also think a lot of the local and sustainable movements have been really well adopted by traditional supermarkets. It works at both the consumer level and economic level as stores understand how to better embrace their communities. Overall, enabling technology is key for the Millennial. Not to replace the physical store, but to extend and deepen their relationship with store personnel and their suppliers to understand who they are and where their food comes from.

Tom Dougherty
BrainTrust

The question of how to motivate Millennials perplexes marketers, including traditional grocers. However, our research — unlike what’s stated above — showed that Millennials ARE brand conscious. They may not be as brand loyal as other generations. New is often their brand choice, but they can still self-identify with a brand. The trick for grocers is to represent something that taps into their own self-identification. Brand is still the way to create preference with Millennials.

Cathy Hotka
BrainTrust

Adrian is right; Millennials do pride themselves on seeking out the new and unusual. But since many non-traditional retailers don’t carry non-food items like paper towels and charcoal, who will inherit that market?

Lee Peterson
BrainTrust

In a word, I’d say that yes, Millennials plus most grocers = a bad mix. From our own studies, Millennials described going to the center of a traditional grocer as “a fate worse than death.” Wow. And with the lean towards healthier food options and the new array of healthy/affordable one-off food service operators popping up, it really doesn’t look good for grocers and their dominant future customer.

Our recommendation for traditional grocers remains the same: turn yourselves into two things; a fulfillment center (BOPIS and ship to home) and a “Social Playground” — i.e., a place to learn about food and engage with more knowledgeable associates while upgrading the quality of the product.

Barring the ability or wherewithal to do those things, the other option is the purely American solution for all retail: just be as cheap as possible and hope for the best (note the sarcasm).

Richard J. George, Ph.D.
BrainTrust

I have researched Millennials’ food shopping behaviors for the last six years with national surveys in 2009, 2012 and 2015. In each wave the percentage of Millennials that have done their grocery shopping in a traditional supermarkets within the past thirty days has declined from 96 percent in 2009 to 56 percent in 2015. At the same time shopping in supercenters and club stores increased for this group, giving credence to their value-seeking behavior. Not surprisingly, by 2015 one quarter of all Millennials shopped for groceries online within the past thirty days.

The solution to increased supermarket visits is not generation-specific, namely, give consumers compelling reasons to visit the store. How? Provide excitement in the store, redesign the center of the store to make it a destination (for example a bona fide breakfast aisle with cereals, milk, eggs, meats, breads, fruit, yogurt, etc.), provide nutritional and wellness counseling, offer in-store restaurants/bars, etc. In other words, make not visiting the store be perceived as a missed social and functional opportunity.

Tony Orlando
BrainTrust
This is a very good article. For me, success at any level requires a commitment to providing excellent signature foods and goods that customers simply can not find at the big box or limited-assortment stores. The problem for my store and many, many others like mine, is the economy of our area. If you have a store in a deeply depressed area your success, no matter how hard you try, will be limited, as these unique foods are on the higher end of the value scale. The discounters dominate our area and we have had six independent supermarkets leave us since 1992, when Walmart and Aldi moved in. Developing a strategy in our situation is to play to both ends of the spectrum by offering outstanding values every day, which will reduce margins, and doing our best to make up the profits with signature deli/meat/bakery items. To some degree this can work, but many Millennials have left our area in pursuit of much better careers and a chance to become successful. Our economy is driven by nursing homes, Dollar General, Walmart, quick cash advance stores and welfare offices, and I’m still here trying. To those who are in this situation,… Read more »
Mark Heckman
BrainTrust

Millennials may be leading the exodus from traditional supermarkets, but they are certainly not the only cohort group that is curtailing their use of this retail format. Sure there are plenty of steps retailers of all stripes can take to attract Millennials and, as with all key shopper segments, it begins with understanding their priorities and in-store shopping patterns.

The good news is that traditional grocers remain in position to offer the broadest and most relevant selection of their favorites and also arrange their assortment in such a way that saves them time and angst vis-a-vis the supercenters and other larger formats. That will not happen, however unless “traditionals” become less traditional.

The larger question remains as to what is the destiny of traditional grocers in general. Given technology, changing consumer preferences and a plethora of new shopper options, obsolescence is right around the corner unless dramatic steps are taken to adapt.

Graeme McVie
BrainTrust
It’s important to bear in mind that Millennials are not one large homogenous group — the cohort is made up of lots of subgroups with different needs. Retailers need to recognize this fact or they risk losing large segments of the age group as customers. A number of studies have shown that as Millennials move from being singles/couples in their early twenties to being families with babies or young kids in their early thirties their needs and wants change and become more closely aligned with previous generations at the young family life-stage. Retailers need to remember these changing behaviors under the Millennial umbrella in order to avoid the risk of throwing the baby out with the bath water when attempting to court Millennials. That being said, there are some characteristics that do appear to be prominent amongst Millennials. Unlike the Boomer generation, Millennials do not consume the majority of their media through three or four national TV channels or a few key newspapers. As a result, Millennials do not simply go to the stores that are solely advertised on TV or in print news. Retailers and manufacturers need to work harder to understand the needs of individual Millennials and deliver… Read more »
Craig Sundstrom
Guest

“Millennials also love unique things”… Gee, Bob, stereotype much?

Anyway, amidst this list of varied — and sometimes seemingly contradictory — claimed attributes, the one that stands out (to me) is “price sensitivity.” (Which of course meshes nicely with the image we are often given of this group not having a lot of money … though, as always, it’s hard to separate age-related from generational differences). It would seem to benefit the Teutonic discounters we discussed yesterday.

As for “traditional grocers” — which I assume means everyone from Walmart and Safeway down to mom-and-pop independents — how they do will be determined by how they react: if they emphasize generics and house brands, and are perceived as offering “value,” then I see no real reason why they won’t do well. OTOH, if they try to replicate the past, or are perceived as being “my parent’s store,” the future will look dimmer.

Joleen Wroten
Guest

In rather generic terms, Millennials tend to identify themselves as being incredibly self-confident and independent. However, this group is highly connected digitally, seeking constant inputs from a broad online network when it comes to shopping, buying and making purchases. To win with this shopper group, retailers and brands should create authentic transparent shopper touch points, online and offline, where shoppers can remain connected and engaged with a larger social community, including merchandising/marketing levers like in-aisle and online videos, forums, product reviews and how-to’s.

William Hogben
BrainTrust

Millennials are already abandoning traditional grocers in droves, and they will continue to. Nothing about the traditional grocery store fits in Millennial lifestyles — Sunday circulars, paper coupons, hundreds of faux-choices for each product, interminable checkout lines — if you came of age with Amazon, Uber and Seamless, what would you think of traditional grocery stores? Millennials will still grocery shop, but it will be at stores that share their values — especially simplicity, ease of use and convenience. Grocers can’t afford to be traditional anymore.

Ken Morris
BrainTrust

While the grocery items Millennials want might be a little different than the products Baby Boomers traditionally bought, the biggest difference is how they communicate and like to communicate with retailers. Many Millennials have grown up in a digital world and never read a physical newspaper. They spend their whole life on their phones, which is their communication vehicle of choice.

While it is obviously critical to source the right products that your customers demand, I think the elephant in the room is how they communicate the products to their customers and specifically to Millennials. I cringe every Sunday morning when I read the newspaper and see all the FSIs, especially those that I can tell are targeted to Millennials. It is time to communicate in the way customers want, not how we have done it for the past 50 years.

Leanna Kelly
Guest
6 months 16 days ago

Speaking as a millennial, I can honestly say this is a possibility, but not for at least 10+ years. The convenience of skipping crowds at supermarkets and the ability to easily manage a budget (because you can see the grand total of the items in your online cart along the way) are both super appealing. The traditional supermarkets have an edge over online for last-minute purchases before a dinner party or event, but I think that problem is being solved by lightning-speed delivery windows.

wpDiscuz
Braintrust
"As Millennials become the largest shopper segment, traditional grocers will understand their buying habits and continue to adjust their assortments."
"Our research — unlike what’s stated above — showed that Millennials ARE brand conscious. They may not be as brand loyal as other generations."
"Millennials may be leading the exodus from traditional supermarkets, but they are certainly not the only cohort group that is curtailing their use..."

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