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Food Retail Study Determines Transparency Yields Greater Brand Loyalty

Label Insight, nutrition facts

A new report released Sept. 18 from Label Insight and the Food Marketing Institute (FMI) reveals that grocery shoppers exhibit loyalty to those products that create deeper relationships through information exchange. 

“The Transparency Imperative report found that shoppers increasingly demand transparency and a closer connection to their food, so much so that 75 percent are more likely to switch to a brand that provides more in-depth product information, beyond what’s provided on the physical label. When shoppers were asked the same question in 2016 in a similar study by Label Insight, just 39 percent agreed they would switch brands.

FMI, with support from Label Insight, developed this report with the goal of defining what transparency means to shoppers and how it impacts their food retail purchases. The Transparency Imperative further delves into attitudes and behaviors among health-conscious shoppers and those who are digitally engaged, and reveals how consumers respond across generations. Recognizing these consumer audiences, the report recommends the necessary steps brands should consider to further embrace transparency; relay information beyond just ingredients; understand the specific needs of key shopper groups; meet the increased expectations of online shoppers; and track changing consumer preferences as this trend progresses.

In the report, 86 percent of shoppers agreed that if food manufacturers or retailers provided access to complete and easy-to-understand definitions for all the ingredients, it would result in more trust. Nearly as many shoppers (80 percent) said that they are more likely to be loyal to a brand that provides more in-depth information. More than half of shoppers (54 percent) are even willing to pay more for a product that has additional product information.

“The new shopper mindset requires brand owners to think about their products well beyond the traditional label and respect a more digitally minded consumer,” said Doug Baker, FMI VP, industry relations. “The study offers several considerations for how to make the best use of these findings, but overall, they require companies to recognize and communicate the importance of transparency and perform a thorough review of their unique consumer audiences and commerce channels.”

What is transparency?

The majority of consumers (69 percent) say it is important or extremely important that brands and manufacturers provide detailed information such as what is in their food and how it is made. Online shoppers (80 percent), college graduates (76 percent) and higher grocery spenders—$125+/week—(75 percent) were more likely to agree with this sentiment.

When asked to further define what elements define transparency, older generations (Baby Boomers and Gen X) are more likely than Millennials to focus on a complete list of ingredients, ingredients descriptions and nutritional Information. Millennials also focus on these indicators, but they are more likely than older generations to look at allergen information, certifications and claims, explanations of ingredient usage information and other details such as animal welfare, fair trade and labor practices. 

“We titled this report The Transparency Imperative because as we executed the research to bring the key findings of our 2016 studies current, we see clearly that transparency is only becoming more important to consumers,” said Patrick Moorhead, chief marketing officer for Label Insight. “Their attitudes and preferences, particularly with the growth of e-commerce, make it clear that transparency is critical to growth and our industry must take action.”

Meet the health-conscious shopper

Nearly half (47 percent) of American households have someone on a diet or following a health-related program. These shoppers are even more likely to place a premium on transparency; 61 percent will pay more for products that offer in-depth product information, versus 54 percent of general shoppers. When a label is not sufficient, these shoppers (89 percent) are very likely to seek out information elsewhere. Nearly half of this segment (47 percent) would be very likely to use a smartphone in-store to find additional information beyond what’s available on the label and the shelf.

The study also found that the presence of children in the home increased the desire for transparency. Shoppers with children are more likely to place greater importance on ingredient information, nutrition and health benefits. They also are particularly likely to find value in accessing detailed product information in-store on their smartphone (87 percent) and to use this method (85 percent).

Grocery e-commerce increases transparency expectations

The study found that 26 percent of shoppers purchased groceries online in the last 30 days. Yet this group represents a valuable demographic—they are more educated, have higher household incomes and are more likely to have children under the age of 18. While Millennials are disproportionately shopping online, they only make up 39 percent of online shoppers. Gen X (30 percent) and Baby Boomers (23 percent) also represent a significant portion.

Online grocery shoppers expect more product information (76 percent) when shopping online than if they were in a physical store; and 72 percent believe that getting product information is even more important when shopping online. Additionally, 81 percent are willing to switch to a brand that provides more in-depth product information, compared to 75 percent of general shoppers.

The Transparency Imperative report is available to download here.

For deeper dives into the report, FMI and Label Insight will offer three complimentary webinars: How Do Diets and Health Consciousness Impact Transparency? (Dec. 5); How Does Transparency Differ Across Demographic/Generational Segments? (Jan. 17); and What is the Future of Transparency in an Omnichannel World? (Feb. 14). Webinar registration is available here.

Keep reading:

FMI Partners With CFI To Develop ‘Transparency Index’ For Retailers

State Of The Grocery Marketplace: Shoppers Demand In-Depth Transparency

Majority Of Americans Trust Fairtrade Label

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