"Accelerating profitability for food businesses" Producers, Retailers, Caterers

Perhaps things aren’t always as the media would like us to believe. The number of trips to the traditional grocery store may be on the decline, but that doesn’t mean that in this recessionary environment consumers are dramatically changing their shopping habits. Consumers are in fact continuing their complicated grocery shopping regimens — shopping a wide array of stores on a routine basis that include supercenters, warehouse stores, grocery stores, regional deep-discounters, farmer’s markets, community supported agriculture and specialty food shops.

Diversity among shopping channels has been the norm among consumers for quite some time. A shopper in Seattle recently explained to us her typical shopping routine:

“Well, I like to go to Metropolitan Market for my chicken, but I get most of my other things at Trader Joe’s or Thriftway. I find the prices are great at Java Bean for coffee. I go to the farmer’s market so I can get greens, vegetables, fish and cheese from my favorite stalls there. I always try to buy bread from Tall Grass and our bagels from Noah’s. My kids love Japanese snacks and miso soup, so that means I usually get to Uwajimaya every other week, too.”

The underlying motivation for consumers to shop numerous channels is the increasing desire to “pick and choose” diverse specialty products. Traditional supermarkets and supercenters are relegated to provide commodity goods and staples. There is a noticeable propensity among urban (and increasingly suburban) shoppers to view Whole Foods, Trader Joe’s, farmers’ markets and specialty stores, such as upscale Wilson Farm in Lexington, Massachusetts (a year round farmers’ market/specialty store, which grows its own produce), as destinations for the highest quality meats, produce, specialty and ethnic products, seafood or prepared foods, while relegating conventional brands, and low price meat and poultry purchases to discount grocers, supercenters, warehouse stores or mainline grocers.
From Coast to Coast, Diversity of Shopping is the Norm

Despite the current economic recession, it’s amazing the lengths people are going to get basic commodities and specialty products, driven by shifting attitudes and needs surrounding notions of price, quality, value, demands of household members, and changing personal tastes and eating preferences. Today, one store has become many:

“Ten years ago it was mainly Stop & Shop…now, I guess, it’s around six or seven stores.” ? Isabella, 53, Boston

“I don’t shop primarily based on price, the feel of a place is important to me. I can’t stand the quality of the experience shopping at Fred Meyer.”
? Mark, 44, Seattle

Most of the channels described here are alternative shopping channels to mass market food retailers. Driven by a desire for higher quality, unique and special products, consumers are heading to specialty stores, local or regional discounters, and farm stands/famers’ markets in growing numbers. So, on one hand, industry data may indicate that consumers are making fewer trips to the grocery store, on the other hand, they are shopping alternative channels that are very difficult to quantify by traditional metrics. These “alternative” channels may represent a relatively minor portion of an average household’s budget, but are still part of the erosion of the supermarket “one-stop” shopping trip.

“Where we shop is more about price now than it used to be. But it is definitely a combination of all the factors…price, proximity to home (“convenience”), or specific things the kids like from Trader Joe’s.”
? Katrina, late 30s, Seattle

The diagram below was drawn by a Seattle-area shopper we interviewed to explain the variety of stores she shops. As you can see, she shops eight different food retailers to purchase her specialty products, from mainstream grocery to specialty stores.

Take Away

Many consumers today, particularly those with access to a diverse range of retailers, now seem to revel in — not be exasperated by — the thrill of the hunt. This is true even in these recessionary times and occurs with diverse micro-tradeoffs debated within households concerning price, quality, value, demands of household members, and changing personal tastes and eating preferences. The desire for “one stop shopping” seems absent from many of today’s urban and suburban shoppers. Food shopping has become a scavenger hunt, the prizes for which include discovery, taste appeasement, bargains found in the process, or the satisfaction of choosing a local product (and feeling good about that).

While not long ago the big worry among mainline grocery operators was the spread of supercenters and a new era of deep discounting for legacy branded goods, today, national and regional grocers who survived the era of deep discounting are learning that shoppers are relentlessly pursuing quality experiences, even in difficult times. Thus, among supermarket retailers, the current focus on discounted staples coupled with high quality private label (e.g., organics) and fresh and prepared products in the perimeter meets some shopper needs — but not all. Importantly, today, value is being redefined as quality, not merely price, in tough economic times. The implication is that the real competition in the future will be smaller food merchants that deliver added value (e.g., expertise, relationship, engaging environments, unique products, etc.) for comparable, if not cheaper, prices.