Leveraging the Changing Dynamics
We routinely hear retail executives convey in so many words, “We’ve never seen so much cross channel competition and change coming from so many places all at the same time.” Food retail finds itself engulfed in an era of self-examination and required business transformation.
More has shifted in food business marketing in the last two years than the previous 50 – new media, new channels, new paths to purchase and all of it fueled by cultural disruption that’s redefining consumer preferences for food and food experience. Important to note: it’s the food culture evolution that drives these conditions and will continue to push retailers to re-configure their go-to-market strategies. Simply stated – food is a culturally propelled business.
Here we summarize the over-arching forces impacting the future of the food industry. What’s most important to recognize at the front end of this conversation: the food retail value proposition can now be defined as the relative contribution supermarkets are making (or not) to:
- Higher quality food experiences
- Integration and support of consumer lifestyle passions and preferences
- Relevant sensory cues and tangible experiences inside the front door
Three major shifts must be fully considered in business strategy and the marketing programs that follow.
1. Health and wellness is redefining the future of food retailing
You can start with data tracking the high growth categories and upward trajectory of premium food products. The most significant leaps in market share over the last five years are found in categories where health and wellness has been an embedded characteristic since day one. Premium yogurt is no longer a category – it is now a department.
Moreover, healthy choice has evolved for the consumer. People no longer view healthier solely as formulation moves that ladder up to ‘addition by subtraction’ – meaning better for you created by removing fat, sugars or sodium.
Now, healthy means fresh, local, whole food, simple ingredients, minimally processed, ethically made, sustainably raised or grown, from brands with a strong belief system and clearly articulated higher purpose.
Health and wellness is a mainstream lifestyle preference and will impact banner choice, purchase behavior, product selection, merchandising and marketing.
2. Foodie is no longer a thing. Elevated food is the thing.
Call it a pervasive, cross-cultural demand for higher quality food and beverage solutions. Palates are more sophisticated – as are expectations – concerning what constitutes a desirable culinary experience.
Convenience is getting its own refinement, too. The home kitchen is enjoying a new renaissance and popularity as consumers verify in overwhelming numbers they prefer a home cooked meal – time permitting – over any other alternative. Part of this is driven by the interest in control over freshness, ingredient quality, customization and perceived healthfulness.
That said, convenience has now morphed into meal kits, prepped ingredients, simplified recipes and other products and services that replicate the scratch cooking experience in less time, using real and fresh food ingredients. Or outsourced meal solutions that hit the same quality markers.
At one point in time “foodie” was used to describe a relatively narrow sub-segment of consumers who were food centric followers of new cooking techniques and high-end restaurants. But now “foodie” has become so commonplace it’s no longer differentiating. Now, we see chef-inspired cooking in food trucks and neighborhood bars with sophisticated menus relative to the deep fried pickles of yore. Elevated cooking, menus and tastes are everywhere, even on the street corner.
As consumers of all ages experience higher quality preparations and more exotic ingredients from every part of the food world, new characteristics have emerged in their behavior and how they interact with food:
- Experiential – food is a social currency and enabler of lifestyle preference
- Authentic – craftsmanship, quality, skill, and faithfulness to scratch cooking traditions matters
- Adventurous – desire for new cuisines, new tastes and flavors from around the globe
Along with these changes, food purchases have now become symbolic expressions of what people want the world around them to believe about themselves, their lives and priorities. This key insight should inform more relevant marketing strategies.
3. Stores to emerge as culinary partner and enabler
There’s another side to the sea change – some friction has surfaced in the form of ‘over choice’ – with so many high quality food options a click away it can create marketplace dissonance, as consumers must work harder to narrow choices.
This condition delivers an extraordinary opportunity for food retail to offer curated culinary inspiration.
As consumers seek to navigate an ever-increasing array of food and channel options, retail can step in to present trusted guidance, trend leadership and edit the selection. Of note, retail banners can provide evidence of their core values and mission not only by thoughtful discrimination of what’s on the shelves, but also what’s NOT there.
Alongside the growth in high quality food experiences everywhere you turn, is an increased level of related marketing noise, and some of it is contradictory. Retail can also provide the respected voice that helps resolve information conflicts.
In the fresh and prepared foods businesses it’s equally important to address the need for super transparency through ethical sourcing and policies that respect the interest in sustainable practices, animal welfare, integrity in labeling and visibility to the supply chain.
At the core here is retail as a culinary partner and facilitator of new food experiences and ideas, reflected as much in how the store is organized and how digital channels are deployed to provide information, education and guidance.
Coming Soon…
Part 2 “The Emergent Credo for Food Retail Growth: Planning Insights to Leverage the Changing Dynamics”
Bob Wheatley is the CEO of Chicago-based Emergent, the healthy living agency. Emergent provides integrated brand strategy, communications and insight solutions to national food, beverage, home and lifestyle companies. Emergent’s unique and proprietary transformation and growth focus helps organizations navigate, engage and leverage consumers’ desire for higher quality, healthier product or service experiences that mirror their desire for higher quality lifestyles. For more information, contact [email protected] and follow on Twitter @BobWheatley.