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Each year, the Food Marketing Institute surveys food retailers to identify what trends will have a positive or a negative impact their company’s sales and profits. This provides insights on what keeps chief executive officers up at night and what consumers are telling them they need to do to remain relevant in today’s marketplace.
The news from the latest edition of the survey report, “U.S. Food Retailing Industry Speaks 2017,” is good for those in food retailing whose primary focus encompasses health and wellness in a larger way than the traditional supermarket has done in the past.
Food retailers reported that the top-two trends that they believe will most positively impact sales and profits are, first, the consumer’s desire to place health and wellness as a value over price or brand loyalty (82%) and, second, consumers’ desire to use their food choices to manage and avoid health issues (77%).
Susan Borra, Food Marketing Institute
Those two trends have dictated what retailers say are a few important steps they must take to remain competitive in a dynamically changing retail food marketplace. Retailers say they plan to expand the assortment of items they place on their shelves to include more that focus on consumers’ desire to improve their own health and wellness.
At the same time, about one-third of food retailing executives said they foresee significant changes ahead in how to allocate human resources in their stores. They expect that in the future they will have to move more staff into parts of the store that will assist consumers to purchase items that not only focus on traditional health and wellness products, but also on produce and fresh prepared items.
Of the several food consumption trends that food retailers believe will generate more sales throughout the industry, they point to consumers’ growing desire to managing their health. That is why 81% of them believe that the health and wellness programs that supermarkets provide for customers are a significant growth opportunity.
In fact, when the interest in those programs was gauged in 2014, only 71% said they thought they were important.
With these conclusions drawn from the “U.S. Food Retailing Industry Speaks Report,” it’s easy to see why food retailers are well positioned to take advantage of the shopper’s interest in health and wellness — as long as they also keep in mind an important consumer demand that was made clear in another FMI report, “U.S. Grocery Shopper Trends 2017”: transparency.
Consumers want accurate, up-to-date information that they can trust on the products they are purchasing and consuming, and they expect retailers to provide that information.
Today’s food system can often seem to be complex, confusing and difficult to decipher. Consumers’ desire for transparency does not mean that they want information overload, rather they want relevant information that serves their personal needs, from assurances of food safety to specific facts that help them meet their health and wellness goals.
While there is always room for improvement in building trust and loyalty with consumers, food retailers start from a comfortable position: 45% of consumers surveyed said they trust their local food retailers to be their health and wellness partner. Only 6% said food retailers were “not on our side.” By comparison, 29% said food manufacturers were working against them, and 46% said fast-food restaurants were working against them too.
Consumers look to food stores to be trusted allies in meeting their wellness needs and buying the freshest, least-processed foods they can find. Retailers who can supply that reliable information are the ones who will earn the consumer’s trust and loyalty.
With the goal to improve consumer trust, it is an excellent time for food retailers and food suppliers to explore innovative ways to provide consumers the valid information they want about the products beyond what can be found on a package label.
The “U.S. Grocery Shopper Trends 2017” report points out there are many perceived deficiencies to be found in product labeling. The two most significant deficiencies that consumers mention deal with ethical practices (information about whether a product is fair-trade; whether it is certified to be humane, cage-free, free range, etc.) and processing practices (for example, is something certified as organic or non-GMO or has no artificial ingredients?).
One tool that is in the development phase is SmartLabel, a modern technology that the program’s founders, FMI and the Grocery Manufacturers Association, believe will change how people shop and help them get answers to questions they have about products — and when they want that information.
SmartLabel provides a plethora of product details that could never fit on a package label. It doesn’t just tell consumers what ingredients are included in products; it can explain what those ingredients are, why they’re in the product, what they do and even where they came from.
This includes how a food item was produced, how animals were treated, and how fish were caught. And the same kinds of details are provided for components that go into the making of household or health and beauty care items.
The concept was created by GMA and FMI under the manufacturing companies and retailers parity-based entity called the Trading Partner Alliance (TPA). It was built by more than 325 people from 90 different companies convened by GMA and FMI, and the initiative’s working group included entities like Forum for the Future, The Sustainability Consortium and the Center for Food Integrity.
Consumers are increasingly more interested in assuring their health and wellness and less interested in price and brand awareness. Successful retailers are working hard to not only give them the products they want in the way they want, but are also building a trusting relationship with the consumer through initiatives like SmartLabel.
Food retailers also benefit from the fact that 82% of shoppers believe that eating at home is healthier than eating at a restaurant. However, the further fact that 78% of people believe that what they eat — at or away from home — could be more nutritional provides a great opportunity for retailers who are willing to provide them with specific directions on how to choose and prepare foods that are better for them.
There is clear evidence that retailers are making changes to meet customer needs. In 2014, just over half of food retailers said they had established health and wellness programs for their customers and employees. Three years later, that had grown to 89%. Accompanying this increased emphasis is the growing number of in-store pharmacies and clinics. More and more retailers are offering their customers a wide variety of health services, from immunizations to health screenings.
Food retailers see their role as being a key partner in health and wellness for the communities they serve. To achieve that goal, grocers will need to provide healthful choices, in both products and services, to ensure that consumers can count on their retailer to be a trusted resource for health and wellness.
Susan Borra is chief health and wellness officer at the Food Marketing Institute (FMI).
