Shopper sentiment: Expect more of the same
Jan. 26, 2014
KANSAS CITY — The state of the food and beverage industry will come into greater focus next week as several companies issue their latest earnings reports. So far the theme that appears to be emerging is consumers remain cautious, with both the retail and food service sectors experiencing continued lethargy.
The McDonald’s Corp., Oak Brook, Ill., said reduced consumer traffic hindered its latest earnings, and the Starbucks Coffee Co. said holiday 2013 was the first in which many traditional brick-and-mortar retailers experienced in-store foot traffic giving way to on-line shopping.
The volume slowdown at retail has been well documented, with center-of-the-store suppliers seeking new insights to catch the consumer’s attention and hold it.
Both the Hershey Co. and J&J Snack Foods will update investors on their performance this week. Both companies market and sell indulgent, snack-type items and it will be interesting to see if that segment of the food and beverage business is as affected as the market for staples.
A MarketPulse survey from the market research firm I.R.I. predicts consumers will remain conservative throughout 2014. For the food and beverage industry this may mean more of the same.
According to the survey, 83% of consumers reported having difficulty affording their regular groceries. Thirty-nine per cent felt their financial picture was worse than a year ago, while 43% said their financial situation remained unchanged from the prior year. To save money, nearly half of consumers are cooking from scratch and using fewer convenience items.
The I.R.I. report comes on the heels of research conducted by the NPD Group showing that 70% of consumers will not try a new menu item at restaurants. Perceptions of taste and visual appeal, as well as healthfulness and price, may drive a consumer to order something new, but generally diners will trade in their pre-planned menu item only if the unfamiliar product is the same food type, the NPD said.
When a conversation turns to food and beverage trends, executives routinely reflect on how much more educated consumers have become about new cuisines and ingredients. The same may be said for consumer shopping behavior. The recession has educated them on how to shop with brutal frugality and that behavior is resonating throughout the supply chain.