inStore - May 2013 - (Page 24)

consumers making choices fork in the road Bakery/deli shoppers are moving swiftly in two directions – toward more value or a richer store experience. by John Unrein W hile it is impossible to predict the future, the evidence is more apparent than at any point in recent years that bakery and deli shoppers are reaching a fork in the road with their food purchasing habits and migrating swiftly in one of two directions. On one side, shoppers are racing toward more value. Supermarket operators like Dollar General and Walmart are growing sales at brisk paces. In foodservice, Subway and McDonald’s are ratcheting up the value bar and winning over consumers who previously bought dinner for their families at Chili’s. Value is king, especially among America’s squeezed and shrinking middle class. Yet there is another seismic shift in the economy that is reshaping demand in the food industry. Since 1980, the top 5% of American households has increased its share of total US income by 10 percentage points, according to government statistics. More than 34% of the nation’s income comes from households earning more than $150,000 per year, according to a report by L.E.K. Consulting. Globalization and fewer middle-class job opportunities, according to L.E.K., should continue to place pressure on the middle class, so expect this trend to continue. This force certainly will drive more food shoppers into the aisles of supermarkets like Whole Foods and The Fresh Market (both of which grew sales by 11% annually from 2007 to 2011, according to L.E.K.). And it’s fair to say the reason behind this movement is that higher income consumers are pursuing a richer food shopping experience. Consider this example of how one East Coast chain is digging deeper into providing food shoppers with a unique culinary adventure. and other items imported directly from Tuscany. The Kings’ team flew to Italy in October 2012 to select foods for this “sensory” promotion, which ran from April 5 to May 2. “During our time in Italy, we focused on procuring simple, flavorful ingredients that would inspire our customers to create their own Tuscan culinary moments at home,” says Scott Zoeller, senior director of delicatessen sales and merchandising at Kings. “The Prosciutto Toscano is a regional specialty, dry-salted and cured with natural flavors such as garlic, rosemary and juniper, and then aged for 14 to 16 months.” When pursuing shoppers at the upper end of the income scale, L.E.K.’s study suggests ensuring you have value-added products that are “truly differentiated” in premium markets. Percentage Change of U.S. Household Income Share (1980-10) 6.1 Bottom 40% (14% to >12% of income) Middle Class (42% to >38% of income) -2.7 -3.5 Top 20% (44% to >50% of income) SOURCE: U.S. BUREAU OF LABOR STATISTICS, USDA ECONOMIC RESEARCH SERVICE, U.S. CENSUS, IRS, BERKELEY CENTER FOR EQUITABLE GROWTH, Kings Food Markets, a 25-store chain based in Parsippany, NJ, recently promoted a “Taste of Tuscany” event in which shoppers sampled gourmet products like Prosciutto Toscano, organic Pecorino cheeses 24 • IDDBA DAIRY-DELI BAKE 2013 SPECIAL EDITION • instore FOOD RESEARCH ACTION CENTER, INTERBRAND, POPULATION HEALTH MANAGEMENT, MSNBC, WASHINGTON POST, CAPITAL IQ, L.E.K. RESEARCH AND ANALYSIS

Table of Contents for the Digital Edition of inStore - May 2013

inStore - May 2013
Editor's Note - Guide to Innovation
Table of Contents
News - On Our Radar
IDDBA Preview
Merchandising Ideas - Show & Sell
Cake Champs
Consumers making choices - Fork in the Road
Product Trends - Dairy
First to Market
Packaging & Equipment
First to Market
First to Market
First to Market
Ad Index
Gear Up for Christmas

inStore - May 2013