Jones, Janice

English

Research Papers in Economics

Consumer Trends: Future Challenges
Janice Jones
This paper is an overview of the most im-
portant consumer trends in the annual Flvfl Trends
report and the annual FM Indusiry Speaks report
from 1999. The Trends report is based on a ran-
dom sample telephone survey of 2,000 U.S. gro-
cery shoppers. One-half of the sample focuses on
shopping habits while the other half looks at top-
ics related to nutrition and food safety.
Current industry trends are best understood
within the perspective of the current economic
environment. Overall, the period leading up to the
time of the survey (January 1999) was strong eco-
nomically-a rising stock market, strong gross
domestic product, low inflation, and low unem-
ployment. These positive indicators reflect a posi-
tive consumer outlook. In this overall positive
economic picture, the food industry reports an
increase in food store sales to $443 billion, repre-
senting a median sales increase for supermarkets
of 4.2 percent.
Changing Consumer Lifestyles
While many of the overall trends in grocery
shopping have remained constant over time, con-
sumers’ lifestyles are changing. These changes
bring challenges to the grocery industry. Some of
these changes can be found in a close analysis of
the data by examining age-related differences,
attitudes of working women, and increasingly di-
verse populations.
While the economic picture remains rosy, the
pace at which people work continues to grow. In
many national polls, the increase in stress, par-
ticularly among working woma is increasing.
Consumers report a decrease in leisure time. More
stress and less leisure time lead consumers to seek
convenience in the way they shop and in the way
they prepare meals. Increased stress leads to a
need to control and simpli~ life.
Although these changes affect attitudes,
when it comes to groceries, the top factors in
choosing a grocery store have remained fhirly
constant over time. The top five factors are:
.kmice Jones is senior research manager, Food Marketing
Institute, Washington, DC.
Percentage Rating “Vey Important”
l High-quality produce 89%
. Clean, neat store 89%
l Use-by dates 83%
. High-quality meat 82’%.
. Courteous employees 77%
There have been some minor shifts in posi-
tion among the top five factors. Use-by or sell-by-
date-labeling has increased in importance since
1995, up from 76 percent to 83 percent and up in
relative position from number four to number
three. Meat quality as an important factor has de-
creased slightly from 86 percent in 1995 and has
dropped to number four from the number two po-
sition in importance.
However, among certain segments of the
population the importance factors show more
variation. The youngest shoppers are 25 percent
more likely to value fast checkouts. Working
women are also more likely to identifi fast check-
out and convenient location as more important.
The oldest shoppers are more likely to care about
personal safety outside the store. And shoppers in
the 50- to 64-year-old age range place a greater
value on getting nutrition and health information.
We look at the difference between the items
that are rated as very important in choosing a gro-
cery store and the items that receive an excellent
rating from the consumer at their primary grocery
store to find the performance gap. ‘l%isgap sig-
nals an area in which stores may need to improve
performance. The following factors registered the
highest pefiormance gap: high-quality produce,
accurate shelf tags, high-quality meat, low prices,
and use-by dates.
Note that price is not the most important
fwtor. In the past nine years, the importance of
price has dropped along with the accompanying
behavior of shoppers to get the best deal when
they shop. Possible causes for this may be the re-
cent good economy and the need for convenience.
Additionally, newspaper readership and subscrip-
tions have been declining, particularly among
younger demographics. This could also account
for some of the drop in the shoppers’ reported at-
tention to newspaper advertising and coupons. In48 A4arch 2000
some cases, the use of frequent shopper programs
may replace consumers’ reliance on coupons and
newspaper ads.
Percentage Drop inPrice-RelatedActions,
l Look in newspapers for specials
. Use price-off coupons
. Shop other than primary
store for advertised special
. Compare prices
However, price is still a factor when
1990-99
-34%
-46%
-5070
-33?40
consum-
ers shop at another store. When asked why they
shopped at a store other than their primary store, 43
percent gave convenience as the main reasou and
39 percent gave lower price as the main reason.
Overall, consumer satisfaction remains high
with their primary grocery store, averaging 8.1 on a
‘lO-point scale. But the satisfaction rating is corre-
lated to age, with the increase in satisfaction paral-
lel to the increase in age. The youngest consumers
are not so happy with their shopping experience.
Only 28 percent of 18- to 24-year-olds rated their
store a 9 or 10, compard to 56 percent of those 65
years-old or older. It is not clear that they will
“grow” into liking the shopping experience either.
And the post-boomer generations, sometimes
called the echo boom are nearly as large as the
boomers. These people will be the primary shop-
pers of the fhture. Will their satisfaction with their
grocery store experience increase or decrease?
Supermarkets Provide More Than Groceries
III an attempt to better serve consumers, su-
permarkets do more than sell grocery items. Take-
out food is on the increase. Shoppers may have a
number of other services available, such as floral
departments, pharmacies, photo-ftishing, video
rental, and banking. Even among shoppers who
have these services available, not all are using
th% even on a monthly basis. For example, only
26 percent of those who have pharmacy services
available use them monthly, and only 17 percent
of shoppers use the floral departments monthly.
One of the biggest changes in consumer be-
havior is the number of meals that people eat out-
side the home. This has led to supermarkets off&r-
ing a greater number of prepared food choices. In
our survey, more than 70 percent of consumers
report eating a main meal out at least once a week.
Journal of Food Distribution Research
Youngest shoppers are far more likely to eat out.
Thirty-one percent of 18- to 24-year-olds eat out
three or more main meals per week. Finding alter-
natives for shoppers who do not want to cook is
one way to keep the food dollars in the grocery
store.
Consumers turn to restaurants, fast-food es-
tablishments, supermarkets, and other outlets for
prepared food sources. Not surprisingly, fast-food
leads other sources in supplying prepared foods.
However, supermarkets are making some inroads
in this area. Fast-food sources have been declining,
from the high of 55 percent in 1992to31 percent in
the 1999 survey. In comparison supermarkets have
increased horn 12percent in 1992 to 20 percent in
1999. Supermarket take-out food is used across all
demographics; however, men in one-person house-
holds are slightly more likely to be the target cus-
tomer. Not all supermarkets provide foodservice
operations in the same wax stores are still looking
for the best practice solutioq whether it be using
foodservice suppliers, making the food from
scratch or using a central company kitchen.
Food Safety and Nutrition
Concerns about food safety are becoming
more important. Recent media reports about meat
in both the United States and abroad, as well as
Coca-Cola’s recent problems in Europe, have fo-
cused consumers’ attention on this issue. As atten-
tion trims to the issue of genetically modified
foods, it is hard to predict how U.S. consumers will
respond.
Shoppers adhere to a number of practices to
keep food safe at home, with washing hands and
surfaces topping the list. These actions are im-
portant because forty-one percent of consumers
believe that people get sick from improper food
handling at home and mishandling is thought to be
the most common cause of food poisoning. There
has been a slight downward trend in confidence in
supermarket saiiety,but the &ajority of consumers
(79 percent) report being completely or mostly
confident in their supermarket. Fifly-six percent
of those surveyed said they would be likely to buy
irradiated food.
M terms of nutritio~ consumers send mixed
messages. While 50 percent of consumers note a
concern about fat, this is a substantial decrease
compared to 65 percent in 1995. Considerably
fewer people report changing their diets by cuttingJones, Janice Consumer Trends: Future Challenges 49
fats, sugar, salt, and red meat than the numbers
that have in previous years. Although 70 percent
of shoppers rate nutrition and product safety as
very important, taste remains the number-one
factor in food selection, with 92 percent of shop-
pers rating it very important.
Technology
We could not think about the fiture without
looking at how new technology will affect the gro-
cery business. Of course, the biggest new technol-
ogy change is the Internet. Numbers of Internet
users rise daily. In some urban areas, 60 percent of
the population report using the Internet. Nonethe-
less, there is still a sizable percentage of consumers
who are lefi behind the digital revolution. Polariza-
tion between “haves” and “have-nots” holds steady,
and people who are economically disadvantaged
are technologically disadvantaged as well. The
bricks and mortar grocery stores are not likely to
disappear for everyone any time soon.
Though more than one-half of consumers are
still wary of shopping online, a sizable number of
consumers are finding online shopping conven-
ient. Will Internet grocery shopping offer more
convenience and control to consumers? Will it fit
the lifestyle and habits of some consumers more
easily? Will more and more affluent and younger
consumers gravitate toward this method of gro-
cery shopping in the future?
What will the Y2K experience bring to the
grocery store? Will computers fail, or is it more
likely that panic-buying will cause more trouble
for stores and distribution of food than any ac-
tual computer glitch? Earlier this year, a Gtier
Group report, quoted by Secretary Glickman,
USDA, stated: “Perhaps the greatest threat to
the food supply industry comes fi-om the con-
sumers themselves. Needless and frivolous
stockpiling of supplies can create isolated in-
dustry shortages.”
Conclusion
Serving more diverse segments of consumers
with more convenience and offering more choices
are the major challenges facing the grocery busi-
ness. Convenience may mean many things: self-
scanning and faster check-out, home delivery,
Internet ordering, and meal solutions to name a
few. Choice may mean greater product varkty and
multiple services in one-stop shopping. Diverse
target groups may mean offering different services
for older consumers, aging baby boomers, or
younger shoppers. More ethnic diversity may re-
quire more variety in ethnic foods and more di-
verse services, such as languages other than Eng-
lish. The challenge for the supermarket business
will be to serve changing consumer needs and to
maintain profitability in a complex and changing
consumer environment.

CONSUMER TRENDS: FUTURE CHALLENGES

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