What’s trending in dairy, deli and bakery? That was the topic of the What’s In Store Live presentation June 4 during the International Dairy Deli Bakery Association’s 2023 Show in Anaheim, California.
IDDBA’s Whitney Atkins, VP of marketing, and Heather Prach, VP of education, spoke on how current trends will shape the future of the association, its members and the industry.
Prach said consumer buying patterns are evolving faster, and “if our industry and individual companies don’t stay ahead, it’s easy to fall behind. The trends we launched in December are proving to be growing, and they’re solid and they’re safe. They are overarching concepts that are taking us through this current fresh grocery climate.”
She said flexibility is what it takes to stay ahead. “We need to be fluid and flexible and evolve from rigid and legacy patterns.”
IDDBA’s five guiding trends are written using data analysis, consumer responses and take into consideration a shopper survey conducted in May, with 1,500 consumers giving feedback, Prach noted.
“These five trends really enable the manufacturers, retailers and marketers to tell the consumers’ stories, which is exactly what What’s In Store Live 2023 does. What once was content marketing has now become storyteller,” Prach said.
She added it is important to consider the five generations of shoppers when discussing trends and consumer insights, as their preferences, behaviors and actions vary greatly.
They are: the Silent Generation (1928-45), Baby Boomers (1946-64), Gen X (1965-80), Millenials (1981-96) and Gen Z (1997-2012).
The silent generation is the oldest group. Often referred to as traditionalist, its members are generally conservative in their shopping habits and tend to prioritize quality over price.
Baby Boomers are known for consumerism. They tend to prioritize convenience and value for money. Generation X is known for financially conservative behavior, and includes cautious spenders. They’re also tech savvy and prefer online shopping.
The Millennials are tech savvy and heavily reliant on e-commerce. They prioritize experiences over material possessions, and social responsibility and brands.
Generation Z are digital natives whose shopping habits are shaped by social media. They value personalization, authenticity and sustainability. Members of Gen Z tend to be the most willing to invest in higher priced products that align with their values.
“There’s a sizable current divide in consumer behaviors right now, with the rapid change in technology and large viewpoints on governance,” Prach said. “As new generations emerge with their unique characteristics, this will create further shifts in consumer trends and expectations in future decades.”
She said the number of Millennials has exceeded the Boomer ranks, and Gen X is expected to surpass the number of Boomers in 2028.
“Soon, it’s predicted that the amount of households led by people under 40 will outweigh the amount of people over 40,” Prach said.
Although the COVID-19 pandemic has passed, inflation is taking its own toll on consumers. Debt levels are rising and savings decreasing.
“All of this has resulted in wages not keeping up with inflation rates,” said Prach, adding that cutting the SNAP emergency fund has greatly affected the dollars spent on food for nearly 25 percent of consumers. All of this has continued to “keep a very home-centered world,” she said.
While this is in favor of food retailing, it also presents challenges that come with change. “However, where there’s change, there’s opportunity,” Prach said.
Following IDDBA’s five guiding trends is one way to maximize those opportunities. The trends include: Whole Health, Whole Heart and Whole Self; Consumer Defined Convenience; the ABCs of ESG; Worth the Value; and Innovation and Technology.
Atkins said there is no longer just one type of consumer. “The need for balance – in-store, online and through marketing messaging is evident.”
Whole Health, Whole Heart and Whole Self
Healthy combines physical health and emotional well-being, Prach said, as consumers are more educated about nutrition and physical health and want to know what they’re putting in their bodies.
“It is no longer taboo to talk about mental health or the overall pursuit of happiness,” she said. “There’s almost 80 percent of people that relate emotional well-being and healthy. There’s a balance here to combine indulgence as a treat and happiness, while still remaining healthy.”
There’s not one definition for healthy. It can vary based on viewpoints that are generational or regional, on food allergies or results-based diets.
“There’s a wide range of these physical callouts that each individual is looking for,” she said.
Any and all attributes of a product should be clearly called out, as shoppers have become label readers.
“I think we were all riding a fine line of mental stability and uncertainty in the last few years. So there’s great comfort in indulgence. Consumers are looking to indulge occasionally and feel good and celebrate.”
Dominique Delugeau, IDDBA board chair, stated in a video message that people are looking for cleaner, better ingredients. They also are looking for smaller portions of higher-priced items.
“People want to eat less of the best…it’s an indulgence, but they’re not going to necessarily walk away from a certain cheese because of the price” but perhaps will buy less of it, he said.
Prach noted that today’s families are smaller and more people are living on their own, with 70 percent of households without children.
“The average household right now is 2.5 people and that’s the lowest rate that we’ve ever seen. Sizing for the meal planning and the amount of guests is important here for health, for value and for waste concerns. Offering sizing options is key to covering your customers’ needs. Healthy plays out in many ways.
Atkins said today’s marketing strategy plans are built around segmentation, targeting and positioning. While mass marketing still plays a role, consumers want and expect personalization through the technology of loyalty programs, social media and e-commerce.
Prach said 77 percent of consumers surveyed say it is fine to occasionally eat some treats. Retailers are creating balance in the merchandising and portion sizes from deli and bakery.
Consumer Defined Convenience
The second guiding trend, consumer defined convenience, is continuing to grow in grocery retail, foodservice and c-stores.
“The on-the-go lifestyle is back…feeding the family has become a balancing act between money, health, taste and time,” Prach said.
Pizza is an example of this convenience. It can be ready to eat and still be customizable, served hot and in-store. Retailers can customize a bake-at-home option or one that consumers can create with some pre-made ingredients.
“This is a great illustration of how life is about continuums and how that can really play out by taking one concept with many options of execution. Home cooking burnout helps our categories and fuels this trend.”
Prach said 41 percent of shoppers are cooking mostly from scratch, while 50 percent mix scratch with semi- and fully-prepared items. Just 9 percent is mostly shopping fully prepared items.
Shoppers want convenience as an option, and this is led by grab-and-go options, where 55 percent of consumers want easier shopping in the grab-and-go, Atkins said. She also noted that shoppers may be thinking of future meals while they’re in the store. They want to know their local retailer will have a reliable selection of grab-and-go, along with easier preparation items.
Providing customization for the consumer is pushing the demand for ordering systems, delivery, make-on-demand and staffing for rush times.
“Home delivery and e-commerce have been difficult for our categories to execute in retail, but they would be worth the investment. There’s a bit of margin loss with the delivery services, but 46 percent of shoppers are wanting that option,” Prach said.
Maximizing the e-commerce platform to give recipes, meal solutions and meal planning can increase sales. Prach said there’s also room to upgrade sandwiches to fresh baked bread in the deli, or a small indulgence upgrade to brioche bread, bagel or croissant.
“Service is still important to our departments for customization.”
Cross merchandising is another way to increase sales with a focus on convenience, Atkins noted.
“Cross merchandising has always been a way to grow sales and profits. It’s also designed to scream convenience,” she said.
Loyalty shopper data is invaluable when addressing the need for personalization, Atkins said. With this data, retailers can make plans to address overall shopper profiles in a store or group of stores.
Also, delivery and takeout present a “huge opportunity” for grocery retailers, as 60-80 percent of people are doing restaurant takeout whereas 30-40 percent are doing grocery retail takeout or delivery.
“There’s a huge gap here. And where there’s a gap, there’s an opportunity to close it,” Prach said.
Atkins said loyalty will emerge by adding marketing messages to ensure implementation. The same cross merchandising and marketing can be used on e-commerce platforms.
“Curbside is here to stay. It’s convenient, it’s quick and it provides options for the family meal, or even that moment when you remember you were supposed to send treats to school,” she said.
Restaurants innovated quickly with curbside as a means to survive during the pandemic. Retail delis can now take advantage of the consumer adoption by working with online technology, Atkins said.
“Marketing has to create the narrative, whether it’s ad plans, digital ads, social media. But the store has to deliver,” she said, noting that adoption of these programs or offerings takes time.
“Convenience will forever lead the forefront in consumer shopping behavior. Consumers will be forever time starved, that’s never going to change,” she said.
Atkins added that c-store operators have been focused on the future of their customers, even pre-pandemic. That led to their success in leading innovation and technology to meet the customer where they were.
In helping to attract consumers during the busy breakfast hours, Prach said What’s In Store Live is showing opportunities in breakfast. Two technology components in bakery include a coffee bot and a bread bot.
“The coffee bot is a full solution to adding a coffee shop feel to the bakery without needing to use the extra labor. And there’s a bread bot. Warm bread comes out every six minutes. These are not shown to replace these categories but to be used in addition – to bring theater, free of labor and to create a consistent product that your customers can learn to rely on,” she said.
The ABCs of ESG
ESG – environment, social and governance – is becoming more widely known and talked about among consumers. Atkins said a colleague broke it down as follows: Sustainability is what a business does; it is internal. ESG is how a business reports. It is external.
Prach said ESG is going to be much more important to the later generations who grew up learning the importance of the planet and recycling. “ESG now takes that conversation beyond just recycling and sustainability for the environment. It is shifting cultures to model a full 360 impact. It is taking into consideration the amount of energy used in all aspects of the product life cycle.”
According to Atkins, ESG is important “because consumers say it is,” adding that “it is forward thinking for the future of our food supply.”
Prach said as interest in the planet and animal welfare are growing, it is important to call out those attributes on packaging. “Consumers are interested in a story. They want to know the backstory of the ingredients and the personalized stories of the producers, the farmers and even the animals involved.”
Atkins said ESG reports the story, “which comes full circle and helps you retain and gain internal stakeholders like investors and employees while retaining and gaining customers.”
Guiding the fourth trend is a reminder that value is in the eye of the beholder.
Prach said this trend’s message is not about price but about affordability and products being worth the value.
“Consumers are really seeking ways to save. Some of these benefit us as retailers, whereas some others really mean that we have some pressures of our own,” she said.
Consumers are trying many different things – buying less, wasting less, looking for deals and promotion. “Teach customers how to use the full product and their leftovers while lowering your in-store spoilage as well,” Prach said.
Several concepts of this may be seen in What’s In Store Live, such as getting creative with boards and snacking. “Anything can be added to a board. This is a great way to get creative with ingredients you have left in the cupboards or the fridge.”
While consumers are reducing their restaurant spending, there is an opportunity for retailers to maximize growth in dairy, deli and bakery for dinner, as well as lunch and breakfast.
As consumer concern over inflation continues, shoppers are looking for value in the traditional sense of the word, Atkins said. They are planning their shopping trips, comparing their store with competitors for prices and promotions.
“Saving is top of mind, and this is how shoppers are making the decisions,” she said.
Identifying store brands in the deli and bakery departments can appeal to the 46 percent of consumers who are more likely to purchase store brands. Creating and supporting digital solutions, along with personalization, “continues to be imperative in the buyers’ journey,” Atkins said.
She noted that IDDBA offers year-round value through its What’s In Store digital reporting and monthly category reviews, along with live and on-demand webinar series.
Prach said dairy, deli and bakery have a household penetration of 98-99 percent. “It’s not about getting the customer to our areas, but it’s more about getting them to purchase items that they wouldn’t normally grab.”
Innovation and Technology
In discussing the fifth guiding trend, Prach said the pandemic caused the industry to jump five to 10 years forward in the area of e-commerce “because there wasn’t a choice.”
She said technology is about creating efficiencies. “In its current state and into the foreseeable future, it can be partnered with customizing and service to continue to deliver those positive experiences.”
On social media, influencers are growing. Prach suggested retailers let their team and customers celebrate the brand or store. Digital price tags reduce labor and self-checkouts are commonplace.
She suggested creating an app and a subscription program to build loyalty. Digital screens allow for instant change and marketing and can be used to drive sales or in idle time.
“People are learning how to cook, how to use ingredients and get inspirations digitally. Three of our generations are using digital much more than any other source,” she said.
Prach also suggested staying ahead of viral trends and merchandising.
“Food is fuel and nutrition as much as social and entertainment. It is now becoming art in the presentation and a fun way to explore flavors. Social has brought food to the top of the conversation…but remember, the digital and the social worlds move fast. So you need to stay ahead and take some risks here.”
Atkins said retailers shouldn’t be afraid to create experiences in their apps but should make them easy to use. Offering payment options also is important.
Atkins said the market size of the global online food sector was reported at $770 billion, with $460 billion attributed to the grocery delivery segment and $300 million in meal delivery.
She noted that it is estimated that it will reach $1.4 trillion in 2027.
“So if we go back and think about the five generations of shoppers, it would likely be unreasonable to think every shopper will use online, ordering and shopping through an app. But when you think of the growth numbers I mentioned, those are huge dollars that simply cannot be ignored. Retail companies recognize the importance of having shoppers’ attention, whether in store or online.”
Prach said the What’s In Store Live area this year is focusing on innovation and technology. “We’ve got AI and automation; they’re being explored in every industry and food is no exception.”
In addition to the coffee and bread bots, virtual reality is being used to train employees on how to clean a slicer.
“There’s a much higher retention rate for employees who walk through the whole process rather than using videos and job guides. Think of this for broken glass, spills, the slicer cleaning, stressful customer interaction, etc. All can be completed through virtual without using up additional labor.”
A delivery bot may be seen on the show floor. Badger Technologies has a bot that scans for planogram execution and out of stocks.
Show attendees were encouraged to visit the What’s In Store Live area to see these and other examples of IDDBA’s Guiding Trends.
For more information about the show, visit iddba.org/iddba-show/about/iddba-2023.