How shoppers are approaching health claims, premiumization and meal prep are some of the areas the Food Industry Association wants grocers to pay attention to.
Following a whirlwind of disruptions in recent years, grocers are not only navigating operational challenges but also grappling with how shoppers are altering their behavior due to higher food costs and lifestyle changes.
As grocers aim to cater to customer needs now and in the future, the Food Industry Association’s (FMI) newest report explores the main disruptions around how people eat, what they eat and how they get food. Called “Future Outlook,” the report is the latest and final installment in FMI’s look at grocery shopping trends.
“Our relationship with food continues to be complicated due to a host of factors, including a strained economy, a continued pandemic, ongoing supply chain issues, adoptions of new technology, and how we hold ourselves accountable for our food choices and our overall approach to eating,” FMI President and CEO Leslie Sarasin said in a statement.
Here are some of the key insights and future predictions outlined in the report, which is based on qualitative and quantitative research including FMI surveys, insights from The Hartman Group and data from the U.S. Census and Bureau of Labor Statistics.
Online shopping usage has persisted as the pandemic continues, with 64% of surveyed consumers in February saying they shopped online at least occasionally for groceries over the last year, up from 52% who said the same when asked in February 2020.
FMI has previously said that it expects omnichannel and hybrid shopping to remain a driving force. As grocers figure out how to serve customers both in-store and online, the trade group said in the report that e-commerce has inspired customers to move further away from using supermarkets as their “primary store.”
This is causing grocery spending to fracture as “shoppers now optimize a trip not only by channel but by method” with more trips and purchases across stores. For example, mass retailers and clubs have gained market share through their “distinctive” shopping experiences, while supermarkets have continued to draw in shoppers with their fresh categories, FMI said.
The trade group’s report tracks with previous research. Brick Meets Click and Mercatus noted that the mass retailer channel in May saw its monthly active user base and online order frequency increase among online grocery shoppers as rising food costs drove them to lower-priced options.
“Beyond incentivizing larger purchases through targeted discounts for loyalty or large baskets, retailers can attract shoppers by excelling at execution of at least one online method and continuing to facilitate shopper control over the quality of their selection,” FMI said.
Dieting for weight loss is out and following personalized “food rules” is in as shoppers navigate dietary approaches to grocery shopping, FMI noted.
Nearly half (48%) of surveyed shoppers said they follow one or more “approaches to eating,” citing low-carb diets (11%), intermittent fasting (9%), plant-based or plant-forward (8%) and “intuitive/mindfulness” (8%) as the top four most commonly practiced.
Shoppers are consolidating the number of dietary approaches they’re following over the course of a year, following an average of 2.3 in 2022, down from 2.8 in 2021. FMI noted that rules that tend to require more discipline are more likely to get dropped. Dairy-free (4 percentage points), Paleo (3 percentage points) and Glycemic Index (3 percentage points) saw the biggest drops year-over-year.
While inflation and rising food prices are making grocery bills larger, some customers are also spending more on groceries by buying premium products.
Among shoppers who are spending more on groceries now versus a year ago, 19% say this is due in part to buying higher-quality items, FMI said.
Shoppers who tend to buy high-quality items tend to be higher income or parents. FMI noted that baby food, plant-based meat alternatives, meal kits, fresh prepared foods and fresh meats and seafood are popular areas for shoppers to turn to premium items. “These categories are the ones most likely to sustain ongoing premiumization even in the face of shopper concern with food inflation,” the report noted.
FMI noted that fresh foods is a category where many shoppers will buy premium options as a substitute for pricey foodservice options. It’s also a category, however, where many price-conscious consumers are “trading out” to other departments like frozen meals, underscoring the difficult balance retailers have to strike in fresh.
“Serving these two groups of shoppers may seem challenging; however, in both cases, shoppers appear to want to ensure ‘high quality’ in whatever categories they do purchase,” the report said.
Connecting premiumization with meal solutions, FMI noted that shoppers will likely trade up when the marketing of the products shows them as less expensive to restaurant dining.
While the report notes that rising food prices influence what shoppers buy at the grocery store more than they encourage people to head back to restaurants, FMI noted grocers are missing an opportunity to showcase their meal solutions.
When asked why they choose restaurants over grocery stores, 40% of 1,400 surveyed restaurant diners said they don’t want to cook. When asked why they didn’t choose fresh prepared food at a grocery store instead, 29% said they “didn’t think about it” and 28% said the restaurant had better options.
While many grocers market their prepared sections as complements to meals, rather than replacements, FMI said increasing customer awareness around hot bars and salad bars as they reopen can help nudge them toward the convenience of prepared foodservice items.
As the trend of at-home eating prevails, a majority of surveyed consumers said they plan their meals ahead of time. Thirty percent plan a “couple of days” ahead while 46% plan same-day but earlier before the meal.
Meal preparation is becoming faster: Thirty-seven percent of surveyed consumers in both 2020 and 2021 said it took an hour or more to prep, which dropped to 26% in 2022. Thirty percent said this year it takes less than 30 minutes to meal prep, compared to 18% and 15%, respectively, who said the same in 2020 and 2021.
“We’re still cooking at home more than ever before, but our enthusiasm for doing so has waned to pre-pandemic levels, suggesting consumers are looking for fresh prepared and ready-to-prep meal inspirations and solutions to address their inconsistent schedules and tightening budgets,” Sarasin said.
As people look to make meal solutions faster and easier to get ready, grocers can consider “aligning with benefits of fresh-prepared and adjacent ready-to-prep options,” the report noted.
While most U.S. shoppers tend to focus on attributes they want to cut out or cut back on, like sugar and salt, there can be generational differences between which health claims are top of mind. Older shoppers are more focused on ingredients to avoid while younger ones are seeking “positive inclusions” such as organic or Fair Trade, the report noted.
Shoppers who are Boomers or older also tend to be more focused on claims related to heart health, like “low cholesterol” and “heart healthy,” while younger shoppers reported roughly double the interest in claims like plant-based and allergen-free.
The generational interest in specific claims may help grocers and brands determine how to target certain customer demographics. Overall, though, shoppers are less focused on health claims than they have been in the past, FMI noted.
“Shoppers may be relying more on trusted brands, product narrative or other cues to assess healthfulness,” the report noted.
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Get the free daily newsletter read by industry experts
While the retail giant has embraced tech with its grocery banners, a recent review of one of its Fresh stores raises the question: What about the food?
CEO Vivek Sankaran says private label, meal solutions and digital loyalty are keeping consumers coming back. But the retailer’s strong Q1 results may be an outlier.
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