New food chain emerging among consumers

01/18/2013 09:19:00 AM
Bill Bishop and Kerry Tucker

Bill Bishop, Brick Meets ClickBill Bishop, Brick Meets ClickIncreasing numbers of food shoppers are making more intentional decisions to be healthier and to support the environment, according to a recent Food Foresight trends report, and that’s good news for produce.

As consumers think more about food choices, it means they are looking for more detailed information about each product — what it is, how it’s produced and where. Some foods are now assigned greater value than others and will therefore command a higher price.

Turmoil in the retail marketplace and new technology are opening opportunities for produce — from producers to retailers. The turmoil is visible in the increasingly competitive retail and foodservice marketplace, which is changing the where, why and how people buy food.

To illustrate:

 

  • Market fragmentation is encouraging the growth of more clearly defined and differentiated food retailers. While Whole Foods continues to be a powerful example at the high end of the market, Aldi is the poster-child example for the price value end of the market. This fragmentation is leading us to the next generation of where to sell food (e.g. Amazon fresh foods, which has been in test market in Seattle and is expected to soon roll out to other markets).

  • Two major market segments are growing and creating opportunities for innovative produce marketers. Each increasingly relies on very different definitions of food:

 

Kerry Tucker, Nuffer, Smith, TuckerKerry Tucker, Nuffer, Smith, Tucker1. Those who have difficulty affording to put food on the table but still need to get the most new nutrition for the money. While many will opt for easy-to-prepare processed foods, there’s still strong motivation in this segment to feed their families healthy meals.

2. Those who define food as part of a healthy and enjoyable lifestyle, with cost remaining a consideration, but not the only one. This shopper segment is more open to paying a little more for something that’s a lot better. The trick to getting them to buy more of your product is to help them understand that it’s worth it.

 

  • Retail food stores are getting smaller as retailers strive to increase sales per square foot. Kiosks offer more product options. Stores are getting smaller to be more profitable. They’re getting better sales forecasting and are responding quicker. Suppliers will need to work with sales forecasting and be more market-centered.

  • Retailers are slowly embracing their own sustainability strategies to decrease costs, increase performance and help the environment (with Wal-Mart moving faster than most). There is more consumer interest so they’ll need to learn more.

  • Buying local has the potential to further erode the aging marketing system. Locally sourced meats, seafoods and produce once again top the list of 20 culinary trends in foodservice, according to the National Restaurant Association’s annual survey of nearly 1,800 professional chefs. Nutrition, particularly in children’s meals, and sustainability are also cited in the top five of “What’s hot in 2013.”

  • Locally grown is a new opportunity for small- and medium-sized growers close to large- and medium-sized population centers. There’s market-centered production with producers marketing directly to consumers. Support is coming from retail grocery and foodservice, farmers markets, community supported agriculture, school districts and consumer direct. There’s an opportunity for producers to segment markets and build relationships. It’s a scalability revolution. You can start small and grow.

 

Chains are trying to catch up to consumers on two-way dialogue. The technology impact is clear in the consumer’s growing use of the Internet. As retailers and foodservice operators strive to catch up with the consumer and begin to take steps to use technology to promote their products to consumers, they are creating an entirely new communications network.

The important characteristic of this is that the information on the network flows two ways — promotions go out to the consumer, and the consumer can express her/his needs, evaluation and frustrations back.

At first blush, this may not sound like something that’s of potential value or even interest to a grower or shipper, but read a little more before you make that decision.

Ask yourself three questions to find out where there’s potential value in all this for you.

1. Do you know which consumers are the “heavy users” of your product? Chances are that they represent less than 20% of all the households that are buying your product, but account for more than 80% of the sales, and probably closer to 10% of your customers are buying 90% of your products.

2. Do you have a good understanding of what the “heavy using” households are looking for from your product and what has been their experience with it? This will be important since it’s these shoppers who are the ones most likely to buy more of your product and who best understand what, beyond price, would encourage them to do that.

3. How much more effective would your marketing and promotion dollars be if they were focused on consumers who are in the “bull’s-eye” of your target market? Reducing the waste in distribution alone would boost efficiency, and, beyond that, there’s an opportunity to build relationships and convert some into raving fans of your products.

Bill Bishop is chief architect, Brick Meets Click, Chicago, and a founding panelists with Food Foresight, a trends analysis process of the California Institute of Food and Agricultural Research and Nuffer, Smith, Tucker Inc.

Kerry Tucker is chief executive officer of Nuffer, Smith, Tucker, a San Diego-based strategic planning and public relations firm.

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