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Customers Driving Grocery Changes

Evolving customer attitudes, demographics and shopping behavior are forcing grocers and suppliers to change how they manage their supply chains – and to do it sooner rather than later.

The more that is learned about what different customer segments want, the more questions are raised about how logistics will help grocers meet their perceived needs and secure market share.

For example, would you have guessed 10 or 15 years ago significant numbers of consumers would care deeply about organic and natural foods, GMOs or the conditions in which farm animals are bred and raised?

The Food Marketing Institute’s annual Grocery Shopper Trends analysis reveals that shoppers’ demand for dimensions of transparency throughout the supply chain creates new challenges for an evolving marketplace.

“The research signals that U.S. grocery shoppers want more than just information; they desire transparency that engages them, offering assurances of food safety, the pursuit of health and wellness, the appetite for discovery and a closer connection to food,” the institute reports.

Overall shopper ratings of how well stores meet their needs arising from the latest natural food trends favor retail channels that lead in transparency, including natural and organic, online-
only, club, fresh-focused, and midmarket traditional grocery stores, the FMI study reveals.

The institute points out that conversely, retail channels trailing in transparency include discount, convenience, supercenter, limited, dollar, drug and value-focused. The poll found 45% of consumers also view their primary store as a primary ally in their wellness pursuits.

Two industry high tech providers, FoodLogiQ and 1WorldSync, recently published a survey that vividly depicts the extent of these new consumer expectations.

According to the survey, 85% of respondents, ranging across demographics from Millennials to Boomers, are willing to pay more for healthier foods, including those deemed GMO-free; that have no artificial coloring and flavors; and are all natural.

The poll also found that 54% of respondents want as much information as possible on the label, and nearly 40% also want country of origin, allergen alerts and GMOs all identified on labels.

More than 50% of respondents expect food companies to fully address a recall or foodborne illness within one to two days.

If a food brand or restaurant that consumers like experiences a recall leading to consumer sickness, nearly 25% admitted they would never use the brand or visit the restaurant again. An additional 35% will avoid this company for a few months and possibly return only after they believe the issue has been fully resolved.

“Building a culture of transparency that is focused on safety and quality can be an incredible marketing advantage and give food companies an edge over competitors,” argues FoodLogiQ CEO Dean Wiltse.

Stricter Supplier Control Wanted

When it comes to choosing the particular store they would most likely choose to visit, 77% of the consumers polled by FMI declared that they would only shop at stores that “impose strict food safety standards on suppliers.”

That is higher than 69% who said they would favor stores with a reputation for selling high-quality goods, and the 69% who said they would favor those stores who make it easy to find out the sourcing of the fresh produce they sell.

FMI also found that 49% of shoppers believe food safety problems most likely are to occur at food processing or manufacturing plants, compared with warehouses (9%) and in transport (5%).

In addition, only 10% believe food safety problems are most likely to originate at restaurants, 7% at home, 4% at grocery stores, and 5% on farms.

Once shoppers choose which natural food item to buy, they also want assurance that “speed of service” will always be a priority – whether provided by a cashier in a traditional checkout line, mobile apps, self-service checkout lanes or even no checkout at all (e.g., Amazon Go), according to research conducted by Boston Retail Partners.

“Grocery retailers are keenly aware that without the IT and operational investments necessary to support these critical, customer-demanded changes, the threats represented by so many direct and indirect competitors – such as Amazon – could be devastating,” observes Scott Langdoc, vice president of BRP.

It is not surprising that savvy grocers around the world are deploying technology at all levels to gain the speed needed to compete with Amazon, which earlier this year shook up the food retailing world when it acquired Whole Foods (AA, 7-15-17, P. 1).

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