A Look At The Shift In U.S. Consumer Shopping Grocery Habits Are Changed In 2008 – 2016
In 2015, U.S grocery shoppers have one goal – to make their money go farther while. In order to accomplish that, they shopped at traditional grocery chain stores, but they also diversified the types of places they purchased food in order to obtain better prices and greater product selection. What’s more, they’re using social media and mobile devices to find the best deals. In 2014, primary household shoppers – of which 54% were female and 46% were male (9) – 83% now shopped at discount (dollar) stores, 91% shopped at mega-stores and 78% shoppe at local farmers markets. (1)
The Food Marketing Institute found that three critical drivers of consumer supermarket behavior were price (37%), convenience (28%) and selection (20%). (7) Higher cost of goods, national unemployment rates and other economic factors are still causing Americans to be cautious with their money. For U.S. consumers, food price is the #1 factor in how and what they buy (22b) as many still feel they’re recovering from the effects of the 2008 economic downturn. (3a) What’s more, the growth “wellness culture,” embodied by a growing consumer preference for real, fresh, less processed food and beverages, has become a key driver in what they bought in stores in today. (2b)
How Americans Are Spending Their Money
The U.S. Supermarket industry is worth $638,338 billion dollars; the average grocery store features 44,000 products. (14) In 2014, U.S. shoppers spent 22.9% of their grocery budgets on processed foods, 21.5% on meat, 14.6% on vegetables, 14.4% on baked goods and grains, 11.1% on beverages and 10.6% on dairy products. (8) The top 10 items they buy are yogurt, bottle water, pizza, poultry sandwiches, Mexican food, fresh fruit, bars, frozen sandwiches, chips and pancakes. (11) On average, U.S. shoppers consumed two products per day labeled reduced calorie, low fat, light, low carb, fortified, organic, whole grain, reduced sodium or cholesterol. (13)
Cost conscious behavior is staple food categories; they’re willing to forgo eating out in order to make better choices at home with the exception of coffee. In fact, one in 10 Americans say their coffee habit would be the last thing they’d cut back on (15a). “Coffee’s addictive qualities are experiencing growth more than ever before, even at $3 for an espresso and $4.50 a latte, consumers will not cut back it as it’s become more a ritualistic part of their daily experiences,” say Krista Peck M.S., a social psychology blogger. “Since they’re price conscious in the what they view as important areas, coffee is a small indulgence.” (28)
American Shoppers Are Fickle and Shop Multiple Stores
Food is everywhere, drug stores offer meals to go, supermarkets offer organic selections and healthy stores have been local wine bars, enabling shoppers to obtain what they quickly and efficiently at any time. This phenomena is what The Hartman Group terms “the Roadside Pantry Effect,” meaning that today’s consumers now navigate a world of 360-degree food availability, picking and choosing from a huge pantry of roadside as well as virtual options. The new dynamic can be disconcerting for food marketers and grocers, who often blame shoppers’ stress and time constraints for the slow disintegration of pantry-stocking behaviors. “Our research showed the “Roadside Pantry Effect” is rooted in many factors,” said Laurie Demeritt, CEO of The Hartman Group. “Consumers don’t want to have to plan food in advance. They can now eat on a whim, which makes food exciting and fun.” (18)
As a result, grocery shopping trips have changed dramatically. In their Food Shopping in America 2014 report, they found that 61% of consumers shop at least twice a week for groceries; more than half of consumers are shopping two or more stores per trip. (10b) to their food stores of choice – something that’s very important to them. Today, a household’s primary shopper is heavily invested in his or her favorite supermarket, averaging 88 trips per year to the store, spending about $6,000 (2a) per year. That averages out to $500 per month, 1.8 trips per week and an average purchase of $62.50 each trip. Between 2006 and 2012, the average shopper made over two trips per week and spent under $50 per occurrence. (5b)
Mobile’s Impact On Shopper Behavior
With the increase in frequency to the store, grocery shoppers are more engaged and informed than ever because they a) are planning what they are re going to buy before they head to the store and b) have access to any food information they need via their mobile devices. Mobile technology has begun to carve away from the traditional brick-and-mortar world of food retailing. “The smartphone has helped consumers increase their food literacy”, says Laurie Demeritt, CEO of The Hartman Group. “Retailers that are able to deliver an enhanced shopping experience while demonstrating compelling value will be more successful in attracting and retaining customers in the long run.”
Demeritt’s research showed that 82% of smartphone users believe the technology has improved how well they eat, and 44% use digital resources, such as blogs or Pinterest, to new recipes to shop with. (23b) Shoppers’ needs to find recipes, make predesigned lists and obtain digital coupons offers hasn’t been lost by Whole Foods. While the retailer has recently undergone decline in sales due to pricing, they currently offer their customers the best mobile applications available to address their shopping needs, users can sync shopping lists, find and curate new recipe collections, post to their social networks, leverage budget tools and even comment and rate content within the apps.
Offering Local Products Created Differentiation – And Sales
As mobile has made customers more food savvy, grocers are now finding that these individuals want more variety, localized food and other specialty goods carried in their local stores. Grocers are addressing by becoming destination for these products, offering their customers organic choices and making take-home meals readily available.
This change in behavior directly to correlates our research that found more Americans eating more meals at home since the recession. “Supermarkets have begun offering serious competition to restaurants,” says Bonnie Riggs, an industry analyst with the NPD Group. “They’re filling the void with innovative dining options without high prices.” (3b) Some of the biggest trends in American grocery stores can be found in the specialty food (paleo/gluten-free/vegan) and the beverage categories of wine and healthy drinks.
Shoppers Are Purchased “Convenience” Meals More Than Ever
In 2015, U.S. Shoppers are buying more ready-to-go meals than ever. For consumers, convenience meals fall into two categories – Ready-to-Eat and Heat-and-Serve. Ready-to-Eat items include rotisserie chicken, sandwiches, sushi, and similar food items and Heat-and-Serve items include fresh pizza, casseroles and soups, are foods that require more preparation at home. Among these two categories, consumers are more apt to be purchasing Ready-To-Eat items (57%) over Heat-and-Serve (44%). (29c)
Ready-to-Eat meals are easier for for consumers that eat out during the week to consumer due to time constraints. During a typical week, lunch accounts for 59% of all meals eaten away from home; dinner accounts for 33% and breakfast 7%, 50% of the consumers that use their grocery stores at lunchtime say they want food options to cater to their joint needs for health, wellness and a higher quality of life. (29a,b) With lunch, the #1 purchase in grocery stores are made-to-order sandwiches, as 46% of consumers feel sandwiches offer the best health benefits. For shoppers, grocery stores that offer ready to eat foods satisfy immediate consumption needs in much the same way as food service takeout. (29d)
Grocers Win As Wine Shops
According to Nielsen, There’s a wine retailing revolution and it’s happening in the supermarket. During 2014, supermarkets across the U.S. (including mass-merchant superstores) saw $8.6 billion in wine sales, a sales number that represents 42% of the country’s store bought wine consumption for the year. (24a) What’s impressive is the growth within these outlets compared with overall wine sales; consumer spending on wine in these outlets rose just over 4% compared from 2013. (24b) Wine is giving grocers an opportunity to boost their profits through product diversification. The sale of wine in an the average shopping trip outlined earlier in this article ($45-$63.50) jumps to $75 when the shopper buys wine. The additional $28 spent by a shopper was for alcohol (about $15) and food to pair with it. This suggests that selling wine not only diversifies supermarket offerings but goes hand-in-hand with gain additional food sales in the process. (24c)
From Pavilions to Trader Joes, Whole Foods to Fresh N’ Easy, grocers are stocking local, affordable and palatable wins to build the incremental purchases noted above. In the U.S. cities it’s allowed, retailers like Cost Plus World Market and Trade Joe’s offer complimentary wine tastings. In Las Vegas, a Trader Joe’s crew member said, “If a customer tries eight wines we’re sampling, most often they buy one bottle that ranges between $8-16.” It’s important for grocers to research local state laws to understand liquor requirements in their area before the carry or sample alcoholic beverages in their stores.
Consumers Want More Natural, “Healthy” Beverages
In addition to purchasing healthier convenient food at supermarkets, consumers also purchased “healthier” beverages. In fact, 28% of U.S. consumers were looking for more holistic, natural ingredients in what they drink; 25% said they look for beverages with the fewest amount of ingredients as they associate anything with preservatives, chemicals, too-long or unpronounceable ingredient lists as a potential cause of negative health conditions. (2c)
“It’s no mystery that consumers are in demand of healthy beverage options that meet a functional need,” said Mitchell Raisch, Co-Founder of Just Chill beverages, a health beverage company with extensive distribution in Whole Foods, Kroger and other grocers nationwide. “When we started working with our distribution partners, we made it a point to educate them about what our products offered the shoppers that bought them. By educating our partners, we are able to help their associates help the label readers and health conscious on what makes our products worth buying from a personal health standpoint.” (27)
While carry healthy drinks options was once confined to natural food stores, there expansion has begun. Fresh N’ Easy currently carries them in their overall beverage section and has a small selection at self-serve check out that customers can pair with their ready-to-go lunch options. Vons and Pavilions carry them in the organic sections of their fresh produce areas. Whole Foods carries them at aisle end points, near fresh foods, in their dairy sections, as well as in the front of the store where shoppers can see them.
Investing In Wellness Drives Sales
The concept of accessible wellness has been growing since 2008. Today we see drugstores transforming into healthcare hubs and grocers going after a holistic health experience. In 2009, Rite Aid introduced wellness + program. The wellness initiative was a hybrid health initiative that provided participants with wellness advocates, a reward points system that gave customers tiered discounts by dollars spent, free health screenings and customized online dashboards for to track their health goals.
For Rite Aid, it was an excellent move as their brand partners saw an extensive growth in sales through it. (17) To further capitalize on wellness+ program’s success, Rite Aid expanded it with a program with consumer loyalty rewards program Plenti. The wellness+ Plenti program allowed users to earn more rewards faster while their other purchases can aggregate other rewards with other retailers they also shop at, including Macy’s, Exxon Mobil, Hulu and AT&T. The success of the program enabled the drugstore to better serve its clientele, donate over $2 million to local children’s charities, and create a coffee and tea shop partnerships in over 1300 stores. (19)
Insights and Opportunities
The fragmentation in food shopping patterns, coupled with growth in e-commerce has led grocers to see a decline in shopper traffic to physical stores. (4) According to Planet Retail’s US research director Sandy Skrovan: “Five years from now, the retail grocery landscape will look markedly different than it does today. Retailers can no longer expect shoppers to come to them, but instead must prepare to be where the shopper is.”(16) In order to maintain sales and customer relationships, grocers are looking to new e-commerce models. Currently 14% of customer currently buy groceries online (5), this number is estimated to grow to 23% by the end of 2015 (10a) as more consumers look for ways to create more efficient use of their time via technology. (6) Partnering with food delivery services such as Instacart could be a great way for grocers of all types to fulfill customer needs.
Capitalizing On In-Store Experience
In the past five years, one of the biggest shifts in consumer behavior brands and retailers have seen this decade is the growth in consumers’ needs of life experiences. Retailers in all product categories are beginning to invest in “experience” to address consumers’ growing desire to have less material possessions and more moments to remember. Grocers are going to want to focus on leveraging “experience” as consumer relationship tool as well.
“The store of tomorrow is less about being transactional and more about the experience,” said Jeremy Bergstein, co founder of The Science Project, a retail innovation firm in New York City. According to Bergstien, grocers can build experiences into their store environments by (25):
- Create Technologically Equipped Communal Spaces: When a customer enters a store, they should immediately feel it’s speaking to their needs. For U.S. consumers, one of their main contextual touchpoints for food is the actual “MEAL.” Often divorced from the shopping experiences, retailers can inject this warmth and context into their stores and bring a whole new high value facet and focus. Leveraging the right technology at key points and leveraging mobile devices, retailers can in essence introduce the customer to the foods that fit their dietary needs. Can you imagine of your phone could say, “May I interest you in trying these great low sugar meal options?” Often, instant connection can completely open up a decision making process and affinity for a brand to inject even these most nominal interactions
- Make Employees Experts To Build Customer Relationships: “Old school” grocers cultivated relationships with customers and their food. They were inherently specialists and category experts in beverages, produce and meat; they dispensed advice and expertise to allow their customers to make the best purchases. This relationship is still applicable today, structuring associate/customer relationships along the lines of what we do in luxury is a simple step back into a specialized more personalized relationship we are all craving!
In 2016 – Capitalize On Immediate Needs
Grocers should continue to capitalize on immediacy in order to maintain their customers. By provided them diverse, pre-prepped foods for lunch and dinner will keep them coming in the stores. Making those pre-prepped foods available for delivery will build online orders. Agility and flexibility are keys to success in the ever evolving landscape of CPG and grocery in the U.S. Retailers must be prepared to give customers access to a diverse range of fresh, convenient and health conscious goods at all times. The grocer that masters providing what they want via whatever method they want to acquire it will ultimately be the most successful.
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This article was originally written for and appeared in Canvas8 in late 2014.