COLORADO SPRINGS, COLO. — The shifts in consumer purchasing patterns the food and beverage industry is experiencing are broader and more pervasive than most industry executives imagine, according to research conducted by Deloitte Consulting for the Food Marketing Institute and the Grocery Manufacturers Association.
Attendees of the G.M.A.’s Leadership Forum, held Aug. 14-16 in Colorado Springs, were given a preview of the research project’s results, which is scheduled to be released in September. The bottom line is the food and beverage industry, as well as the entire consumer packaged goods category, is in the midst of dramatic change, and that change is consistent across age ranges, regions of the country and income levels.
“It’s bigger than you think,” said Tom Phillips, director of Deloitte Consulting, during a session at the G.M.A. Leadership Forum about the results and how it is affecting the food and beverage category. “The study itself got to the consumer value equation. The consumer value equation is what is driving purchase behavior. The goal of the research was to determine if there is a shift under way and how pervasive is it?”
Part of the research project involved talking with consumers after they had finished a shopping trip. The people involved in the study would review the products in the consumer’s basket, choose a specific product and question the consumer about what drove them to make that specific purchase.
The results presented at the G.M.A. Leadership Forum session were divided into two preference categories: traditional preferences, which include such attributes as taste and convenience, and evolving preferences, which includes such attributes as health and wellness, safety and social responsibility.
“In terms of preference, more than half of the population identified evolving preferences over traditional preferences in relation to their purchase,” Mr. Phillips said. “And it’s not who you think.”
When the results were broken out by age, regions of the United States and income levels, evolving preferences won out.
“When you look at income level, it has been assumed evolving preferences would index heavily toward those who can afford it, but the research shows it is hitting a much wider demographic,” he said.
Mr. Phillips added that the results show many of the shifts taking place may be more nuanced than many imagine.
“There is a conflation between health and wellness, safety and social responsibility,” he said. “Safety is a wonderful example of that. The consumer didn’t just think about if they may get sick from a product. They also were concerned if there is something in the product that may cause long-term harm to their family.”
Beth Ford, executive vice-president, chief supply chain and operations officer for Land O’ Lakes, Arden Hills, Minn., and a session panelist, said she initially challenged the research results when she first saw them.
“The fact the results were so pervasive and across every income level made me question them,” she said. “But the fact it was post purchase is central to the findings. These changes are here now and we have to work with them.”
To underscore the nuances in the changing consumer shopping patterns, Carolyn Sakstrup, vice-president of Target Corp.’s guest center of excellence, Minneapolis, relayed to the session audience the shifts the retailer has made in its product selection to keep pace with the changes.
“It is pervasive and I think it will be enduring,” she said. “Look at health and wellness. It’s not about health food anymore. We launched our own Simply Balanced brand in 2013 and have now extended the categories its covers to include pizza, chips and chocolate.”
Several of the session panelists said addressing the shifts will require changes in how the industry communicates with consumers as well as changes in how they partner with customers and suppliers.
“Transparency in many cases equals confidence and trust,” said Jim Borel, executive vice-president of DuPont, Wilmington, Del. “Particularly in today’s environment; if you don’t provide information consumers will assume the worst. So we need to recognize that and rise to the challenge.
“The problem is consumers are not going to dig deep. They are not going to read a scientific report. If they have a concern they will check with friends and family. As companies we have to be proactive and find ways to talk with consumers.”
Ms. Sakstrup identified communication as a key attribute as well.
“You have to be flexible, adaptable and interact with consumers,” she said. “Starting and acting on a dialogue with consumers is increasingly important. Their expectations are only increasing. We have to evolve to keep up with that.”
To achieve that goal, Target has people within the organization focused on the trends and charged with trying new solutions to address the changes.
“The hard part is how do you protect a small group of people in a large organization so they can focus on trying new things to get products and ideas to market quicker than we have been able to?” she said.