Natural Foods Merchandiser

A new naturals consumer

For the last year or so, there’s been no need to consult your local psychic to forecast your store’s future: All signs have pointed to bad economic juju. But with the clairvoyants of commerce predicting an end to the recession soon, it’s time to once again gaze ahead. We asked leading market researchers to do some demographic divination and come up with a profile of what the natural products shopper will look like in five years, and how that will affect your store. Here are six key trends they suggest you keep an eye on.

Trend #1: Single suppers
“The changing configuration of the American family has sweeping implications for food-purchasing behavior,” according to Rockville, Md.-based Packaged Facts’ March 2008 report, “The Future of Food Retailing.” In 2006, fewer than 23 percent of all U.S. households consisted of a married couple with at least one child under age 18, and experts predict we’ll continue to see that percentage dip.

Natural foods shoppers are less likely than the general population to be married, says Steve French, managing partner with the Natural Marketing Institute in Harleysville, Pa. NMI data show that 55 percent of Americans are married, compared with 45 percent of natural foods consumers. “Naturals shoppers are leading the trend in single households,” French says. But that doesn’t mean they’re all childless. Packaged Facts reports that nearly half of all U.S. households have at least one child under age 18 living at home.

What this means for you
Singles are more inclined toward grab-and-go food, but here’s the paradox: Packaged Facts data show that people who frequently shop at naturals supermarkets are the most likely of all consumers to cook at home—and the least likely to eat premade, store-bought meals. “This suggests opportunities for convenience-oriented items that may involve a bit more preparation beyond just ‘heat and serve,’” say researchers.

Whether single or married, parents with young children are less likely to shop at natural products stores. That’s bad news because demographers predict that by 2015, the number of U.S. households with kids under age 12 will increase by 10 percent. Packaged Facts data show that these parents are most likely to shop at Walmart, club stores or dollar stores. The reasons are complicated, according to Packaged Facts Research Director David Sprinkle. “I wouldn’t say it’s just price. One-stop shopping is a huge factor, for example, for busy parents buying batteries, Band-Aids and school supplies along with groceries. Marketing and advertising to children also steer parents to mass markets rather than natural food outlets.” Sprinkle’s advice: Unless your store is in a location with a lot of kids, concentrate less on this demographic. “Natural food stores have to choose their battles in areas where they offer clear and memorable advantages,” he says.

Trend #2: It's raining men
NMI data show that in the last 10 years, there’s been a significant increase in the number of men shopping in natural foods stores—from 24 percent of all consumers to 36 percent. Why? The Food Marketing Institute’s “U.S. Grocery Shopper Trends 2009” report shows that not only have women had fewer layoffs during the recession, but 58 percent of all American women now work outside the home. For the first time ever, the majority of U.S. families’ prime wage earners are women. As a result, Packaged Facts reports, only 68 percent of women today prep and cook food for their households, compared with 94 percent two decades ago.

What this means for you
Even more men will be shopping and chopping in the future. Catering to these guys means stocking up on grab-and-go foods and checkout-stand items. “Men tend to shop without a list, be more spontaneous, impulse buy and spend more,” French says. Good news for naturals retailers: “Women will always be the health gatekeeper for the family, but men are finally realizing there’s a connection between diet and wellness,” he says.

Trend #3: The generation gap
Children under age 12, people age 55 and older, and those between ages 18 and 34 are growing segments of the U.S. population. Boomers currently represent one-third of all Americans, and that number is expected to increase between 26 percent and 35 percent by 2015. Meanwhile, the number of Millennials is expected to increase between 6 percent and 12 percent by 2015. But the younger members of this group, currently ages 18 to 24, are 30 percent less likely than other consumers to shop in a natural foods supermarket, reports Packaged Facts. Nearly two-thirds of them opt for convenience stores instead.

What this means for you
According to Packaged Facts, older shoppers like smaller, more conveniently located grocery stores; functional foods and supplements; frozen foods or foods with long shelf lives; and foods in smaller packages. Also important to note: People over 55 continue to be skeptical about the benefits of organic food and beverages and are the least likely to be frequent purchasers of organic products. This suggests the need for more explanation about the benefit of organics from retailers, growers and manufacturers, according to Chicago-based market research firm Mintel. Retired boomers also have more time for shopping and meal prep, and may take up cooking as a hobby, reports FMI. Consider adding cooking classes to take advantage of this growing trend.

How do you attract college-age kids to your store? Stock up on low-price, grab-and-go foods; use social networking and other high-tech marketing; keep an eye out for the hippest new products; and emphasize community tie-ins with “green” causes that appeal to younger generations.

Trend #4: A melting stockpot
By 2020, the U.S. Census Bureau predicts non-Hispanic whites will account for only 61 percent of the population. Hispanics will be 18 percent, blacks 13.5 percent and Asians a little more than 5 percent of the census. Hispanics can be difficult to market to because their country of origin and level of acculturation significantly affect shopping behaviors. However, Packaged Facts notes that proximity is the No. 1 factor in Hispanics’ store selection—four times more important than the No. 2 factor, price. The reason: One in four Hispanics walks or takes public transportation, compared with one in 33 of the general population. Hispanics also spend the most of all populations on food eaten at home, according to the U.S. Bureau of Labor Statistics.

Naturals stores attract all of these ethnic groups, particularly Asians, who tend to be affluent and well educated and, consequently, twice as likely to shop at naturals supermarkets than other grocery stores, according to Packaged Facts.

What this means for you
More than 44 percent of U.S. adults like foreign foods, and that number is increasing, according to Packaged Facts. What’s more, naturals supermarket shoppers lead all consumers in the categories of “I enjoy eating foreign foods,” and “I’m usually quick to try a new international product.” Laurie Demeritt, president of The Hartman Group in Bellevue, Wash., says one reason is that many ethnic foods are perceived as healthier. “Natural foods shoppers are also interested in the whole ritual of eating ethnic foods,” she says. “If they have pad thai, they’ll eat it with chopsticks.” This interest can open up a new world of merchandising opportunities.

Asian-Americans had the highest median household income in the U.S. in 2006, according to Packaged Facts, but retailers in only a few areas of the country benefit. More than half of Asian-Americans live in just three states: California, New York and Hawaii, although Texas is gaining. Typically, they shop for Asian specialty products like kombucha or traditional Chinese remedies, Demeritt says, along with produce, seafood and meats. “As of yet, relatively few conventional retailers have reached out to tap this group’s buying power,” Packaged Facts reports, creating a niche for naturals retailers.

Trend #5: Promiscuous shoppers
The typical consumer will shop for groceries in a whopping eight locations by 2010, Packaged Facts reports. Naturals retailers aren’t immune to this food surfing, although the IBM Institute for Business Value’s 2007 “Customer Focused Grocery Study” found that 46 percent of natural foods shoppers wouldn’t switch stores if another grocer moved into their area—compared with 27 percent of conventional supermarket shoppers. Demeritt says Hartman Group research shows that even shoppers who are “more engaged in health and wellness” tend to go to budget stores for nonfood items and concentrate mainly on fresh products when they hit the naturals store. “The theory is that they only buy fresh and perishables at stores they really trust,” she says.

What this means for you
To attract and keep shop-around consumers, mix up your product selection and tailor it to them. That way, your store becomes a one-stop shop. Florida-based Publix GreenWise Markets, which are offshoots of the mass Publix supermarket chain, offer natural and earth-friendly products alongside a smaller selection of conventional goods. The nontraditional model appeals to customers who want to buy and learn about natural and organic products, but who also want an occasional indulgence.

Trend #6: Desk diners
FMI information shows that between 2006 and 2009, the number of American full-time workers who brought lunch from home soared (from 41 percent to 56 percent), and that’s expected to increase. The reason? Cost is certainly a consideration, but more importantly, 92 percent of all grocery shoppers believe the food they make at home is healthier than that from a restaurant. However, Packaged Facts reports that the definition of “home cooked” varies greatly. “To some, home cooked means a made-from-scratch meal that takes an hour or longer; others call it home cooked if it means turning on the oven or microwave for longer than two minutes.”

What this means for you
The next best thing to homemade for customers: grabbing a prepared meal from a natural grocer rather than a restaurant. Packaged Facts reports that one in five consumers is buying premade lunches from grocery stores. Even if you don’t have space for a full deli bar in your store, consider stocking your refrigerated section with salads and sandwiches for the lunchtime crowd. To make homemade dinners easier for customers, put quick and simple recipes in your store newsletter. Or create an endcap that features a seasonal recipe: Offer a take-home recipe card and display the ingredients customers need to make the meal.

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