Cash In With Consumers

Marketing is a key business management practice that has a profound impact on overall profitability of many specialized commodities produced in Florida. Understanding consumer wants, perceptions, and needs is key for producers to consider when deciding which varieties or crops to produce; which marketing channel they will distribute through (i.e., broker or direct to consumer); and how the product will be packaged or presented. Today, many large-scale producers sell through brokers that typically distribute to the supply chain a standard product, whereas smaller producers may sell direct through a pick-your-own operation or farmers market.

It is essential to understand that today’s consumers are increasingly savvy shoppers. Recent economic pressures have caused a shifting of consumer priorities. The Food Marketing Institute commissions an annual survey of grocery shoppers and their shopping priorities. Although consumers still value quality and store cleanliness, the emphasis on low prices has risen from fourth to first from 2005 to 2011. Retail grocery buyers in turn put pressure on food supply chains to reduce the cost of products to consumers.

Healthy Choice

Consumers still value high-quality produce, and that is good news for Florida producers. Perhaps more challenging is defining what consumers mean by “high-quality.” For some this means packaging that protects the product, increases shelflife, and allows it to be easily seen. For others, it means product that requires little preparation time or a product that includes recipe ideas.

Consumers' Purchasing Priorities

Rank	2005	2011
1	High-Quality Produce	Low Prices
2	High-Quality Meat	High-Quality Produce
3	Clean Store	High-Quality Meat
4	Low Prices	Accurate Shelf Tags
5	Accurate Shelf Tags	Items On Sale
6	Cear Use By/Sell By Dates	Clean Store

Source: Food Marketing Institute webinar: "Food Retailing Trends -- Shoppers & Retailers"

Consumers want to eat healthier. United Press International reports that the American Heart Association is out with new research showing that “in-store promotion and nutrition information on the front label of food packaging helps shoppers make healthier choices ... when a tag was put on the grocery store shelf showing that a product had the Heart Check mark indicating a heart-healthy food, sales increased 1.5% to 6.7%, depending on the group of shoppers. Kevin Coupe, a featured speaker at the upcoming 2012 Florida Agriculture Financial Management Conference commented on this research: “We don’t always do the right thing, or the smart thing, but generally, I think, most folks want to try to do both when it comes to eating habits. We often are seduced by the lesser angels of our natures, or by McDonald’s french fries, but we try.” (Morningnewsbeat.com).

Youth Shall Be Served

Millennials are likely to challenge food retailing in the years ahead. A new study titled “Trouble in Aisle 5,” from Jefferies, the global investment bank, and AlixPartners, reported the following shifts that the study predicts will cause both challenges and opportunities for retailers:
• Convenience is more important to Millennials. “They expect to get what they want, when and where they want it, and they know they have options for both products and retailers.”
• “Millennials are much less loyal to both food brands and traditional grocery stores and much more willing to explore different distribution models (online shopping, smartphone shopping, delivery services, etc.) and spread their shopping across different brands and channels (mass merchants, club stores, drug stores, convenience stores, online, etc.) to fulfill their consumable needs.”
• Millennials also are more price-sensitive than Baby Boomers, but they are “willing to pay more for the specific attributes they value: convenience, freshness, health, variety (of flavors, international/ethnic cuisines, product sizes, etc.), and natural/organic.”
Scott Mushkin, managing director and senior equity research analyst covering food and drug retailing and packaged food at Jefferies, says the at-home food industry is just beginning to feel the impact of this major demographic shift as Millennials rise in prominence and Baby Boomers adjust to meet the requirements of age and a fixed income. “The bottom line for food-at-home industry stalwarts is that big changes are coming, and companies who don’t fully understand those changes risk being marginalized.”
(Morningnewsbeat.com).

Purchasing trends point the way to stay relevant in the supermarket.