Changes in Grocery Shopping Patterns Driven by Demo’s and Technology
There’s a dramatic shift underway in the way we buy groceries, driven by the shift in dominance from Baby Boomers to Millenials, and the upsurge in mobile technology. Implications for the grocery industry: expect even less loyalty to channels and brands than we have today.
Progressive Grocer cites the shift from Baby Boomers to Millennials as a key driver of changes in shopping patterns.
There will be lots of Millenials. By 2020, Millennials over the age of 25 will make up 19% of the population (they are only 5% in 2010). By that time the Baby Boomers will finally fall to below 20%.
They have money to spend. Unlike retired Baby Boomers, on fixed incomes, these Millenials will be entering the time of life associated with high spending as careers progress, households form, and children are born.
Millenials are less loyal to channels and brands.
Millenials: 47% rate brand name “extremely” or “somewhat” important in driving grocery choices, vs. 61% of Boomers. They may also be more open to trading down to private-label products (require less of a discount to trade down).
Millenials: 41% of total food $ are spent at traditional grocers, vs. 50% for Boomers.
Millennials spend differently.
They are more price sensitive than Boomers, willing to shop for deals,
They are also more willing to pay more for natural/organic foods (58% would pay more, vs. only 43% of Boomers).
Shifting channel use, increased role for digital media:
We are increasingly fragmented in our channel use, and we are using technology to facilitate our grocery shopping and food decisions. This doesn’t necessarily mean buying groceries online, that’s still a tiny business (but growing robustly). It does mean using smart phones and other technology to expand and express our engagement with food. In just one year, 2011, the penetration of smart phones has skyrocketed, from 27% to 42% (ComScore, 2012 Mobile Future in Focus, February 2012). In a recent article The Hartman Group reviews results of proprietary research on the role of the Internet in driving grocery purchasing patterns. Some trends they call out:
Online purchasing of CPG “works”only in some cases.Those most like to be satisfied with buying consumer packaged goods online: dual income, harried households – they pay more for online goods, but the convenience is worth it.
The weak spots for online buying are opps for bricks & mortar. Fresh foods just don’t work well online, still. Successfully engaging consumers around perishables will be a differentiator for retailers.
Social media can be used to engage consumers – and support retailer loyalty. The Hartmann article cites some great examples, such as Whole Foods, of retailers that are successfully engaging their customers around the food experience, both digitally and in the store. Building that strong engagement ties their target consumer to the WF brand.