Study finds traditional grocery stores, food brands may fall out of favor
NEW YORK — It seems that traditional grocery stores and established food brands may lose their position in the market due to a confluence of changing demographics, economic factors and customer preferences, according to new research from global investment bank Jefferies and global business advisory firm AlixPartners.
In their study, "Trouble in Aisle 5," the companies surveyed 2,000 consumers ages 18 years and older and found that millennials — those consumers born between 1982 and 2001 — are positioned to become the next "mega-generation" as baby boomers — those born between 1946 and 1964 — move into the next phase of their lives and consequent shopping patterns.
"We envision an environment that will require increased nimbleness and a relentless focus on the consumer for established food manufacturers and retailers, and the potential for rapid growth for new concepts and products," said David Garfield, managing director at AlixPartners and head of the firm’s consumer products practice.
Millennials, the study noted, present a strikingly different attitude towards consumption than their baby boomer parents and grandparents. For them, convenience outweighs loyalty. "Trouble in Aisle 5" found they are 23% less likely to value food brands in their purchasing decision and 18% less likely to shop at traditional grocers, a major shift from baby boomers’ shopping priorities. In line with this, millennials are much more willing to explore different distribution models (i.e., online shopping, smartphone shopping, delivery services, etc.) and spread their shopping across different brands and channels (i.e., mass merchants, club stores, drug stores, convenience stores, online, etc.) to fulfill their shopping needs. Interestingly, most of the millennial demographic is price sensitive but are willing to pay more for the specific attributes they value: convenience; freshness; health; variety (of flavors, international/ethnic cuisines, product sizes, etc.,); and natural/organic (58% of millennials, compared with 43% of baby boomers).
"Millennials clearly present significant challenges, and food-makers and traditional grocery retailers need to start making changes now to address the emerging needs of this demographic group, as in many ways we’re just in the second inning of this ball game," said Scott Mushkin, managing director and senior equity research analyst covering food and drug retailing and packaged food at Jefferies.
Although millennials’ prominence continues to rise, Jefferies’ and AlixPartners’ study noted that baby boomers continue to maintain significant influence on traditional center-of-the-supermarket purchases, although they are set to move out of their peak-earnings years into retirement and will be more reliant on fixed incomes by 2016. Because of this, appears less willing to pay additional money for what they desire.
Overall, the study concluded, food-makers and grocers will have to adjust to meet the needs of both millennials and baby boomers as they age and as their finances, preferences and choices change.
"In addition to adjusting to a new financial situation, baby boomers are now paying greater attention regarding their food choices as a means of remaining healthy and extending longevity," said Rich Vitaro, director in the consumer products practice at AlixPartners. "Taste, freshness and quality will continue to be important, as will products addressing health and wellness and specific dietary needs tied to aging."
The food price, value, service equilibrium is ready-2-eat and heat-N-eat food. The price, value, service equilibrium is resetting in Grocery stores, Restaurants and Convenience stores. Enter the grocerant niche with ready-2-eat and heat-N-eat fresh and prepared food. Consumers are looking for new products, new packaging and time saving options. They have found them in ready-2-eat and heat-N-eat food. They are attracted by the fresh prepared focus, new portion size, and price points. Which provide a strong margin for increased profitability for the retailer? All food sectors have noticed a discontinuity in consumer food shopping behavior and all are fighting for share of stomach. Contributing to this displacement is a focus on short term market metrics particularly price and away from the consumer. Which in turn has caused a loss is consumer traffic in some sectors. There are other attributes that are much more important to the consumer, yet many don’t take time to look. Most consumers lack the knowledge, know how or desire to cook from scratch. Meal assembly is key to a successful family meal. Most preparation is comprised of utilizing fresh prepared components that are ready-2-eat or heat-N-eat. Restaurants, Grocery store deli’s, Convenience stores, Drug Stores and even Dollar stores are sell meal components that are mixed and matched then bundled into a family meal. What kind of food are you selling and where can it be consumed?
A&P stores now offer Skinny Water
MONTVALE, N.J. — Grocer A&P is now offering Skinny Water, a player in the zero-calorie enhanced water category, in 275 stores throughout the mid-Atlantic under the A&P retail banner of stores.
Retail store locations under the A&P banner that will carry Skinny Water include Pathmark, Superfresh, Waldbaum’s and A&P.
The Montvale, N.J.-based grocery chain A&P operates more than 300 stores in the United States under seven retail banners, which include conventional supermarkets, food and pharmacy combination stores, and discount food stores.
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3M targets ‘weekend warriors’ with its Ace Brand Champion Challenge
ST. PAUL, Minn. — 3M on Wednesday announced that reality star Ryan Sutter has signed on as spokesman for Ace Brand beginning with the launch of the ACE Brand Champion Challenge, which runs from July 11 through Sept. 10. The Ace Brand Champion Challenge encourages people to share stories and photographs on ACEBrand.com/Champions that demonstrate what makes them or someone they know a champion.
“At a time when the world will be celebrating the athletic triumphs of the 2012 Summer Olympics, we wanted to bring attention to America’s everyday champions — the weekend warriors who are dedicated to embracing healthy and active lifestyles,” stated Paul Conley, brand manager of Ace Brand Products for 3M’s consumer healthcare division.
The first 10,000 participants of the Ace Brand Champion Challenge will receive a free Ace elastic bandage in a limited-edition black or green color that has been produced for this sweepstakes. Additionally, all participants will be entered to win the grand prize of a $2,500 gift card to help fund their next adventure, as well as a series of runner-up prizes.
As a lieutenant in the Vail Fire Department and active father of two, Sutter embraces being a “champion” in his daily routine by always staying active. He will kick-off the Ace Brand Champion Challenge through a personal video that asks fans to share their champion stories and photos.
“Being a champion has a number of different meanings to me. From taking a hike with my kids to preparing for my next marathon or bike race, I stay active and fit so I can always be ready for a challenge,” Sutter said. “I’m proud to be involved in the Ace Brand Champion Challenge and look forward to hearing the stories of other weekend warriors as well as those who share a similar philosophy."
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