Consumer preference for healthier choices is driving reactionary change in the retail and consumer products industries. This was the theme at the seventh annual St. Joseph’s University Food Industry Summit held last week.
Statistics showing decade-by-decade increases in body mass index within the U.S. were juxtaposed against moves by retailers and food companies to meet escalating consumer demand for healthier fare. Reasons for the move are essentially economic — a large segment of American consumers with significant spending power are coming to respond to and purchase products that promise to counter obesity at the expense of products that do not (as illustrated by healthy product sales performance growth, shown by Ahold).
This is not an entirely new trend, as pointed to in this blog post where retailers and manufacturers alike seemed caught off guard by shopper patterns favoring the store perimeter (where fresher, healthier fare is usually found). In that post, I wrote about how pre-empting this behavior could be argued as a function of richer consumer insights. Problems with center isle store performance were raised by at least one speaker.
Moving up the value chain to the characteristics of the products themselves, innovation, reformulation and re-packaging were also talked about by multiple speakers as necessary to respond to changes in consumer demand. Just as consumer insights could identify changes in shopper patterns, so too could these fuel new product development, testing and launch as described in this other post.
Underscoring the scope of data and analytics to support this “insight to innovation” idea was McCormick, which leverages a multitude of sources to inform their consumer insights, marketing and product-related functions.
McCormick’s Jerry Wolfe also touched on the emerging CPG e-commerce trend arguably best illustrated by P&G’s online store. Nielsen presented a slide showing a distribution of consumer products by online sales activity and digital engagement. The trend is growing, with Gartner reporting just yesterday in a new report “a significant jump in the use of digital marketing to support B2C e-commerce, with 23% using it in 2012 versus 11% in 2010.”
Even so, Wolfe pointed out that for most consumer food products, “it’s not about the commerce, it’s about getting on the list,” which makes sense given his comment that some 70 percent of households have dinner at home (not carry out) and choose among just 9 different recipes. Breaking that code can be challenging, but like any business challenge, analytics can solve for it.
The importance of consumer insights shouldn’t get lost in equally important consumer relationship development, as talked about in this webinar. Wolfe cited the 80/20 rule to explain how in the past just 20 percent of product choices were made outside the store – because in the past there was no digital, no social and no mobile, it was all about the store. Now, some 80 percent of the decision making process happens outside the store, placing a lot of emphasis on knowing your consumers and shoppers as intimately as possible.