Disruptive Macro Trends the Food Industry Can’t Afford to Ignore
In today’s rapidly evolving food marketplace, we’re seeing more competition, disruption and change than ever before, which is being accelerated by socioeconomic forces, demographic changes and a shift in purchasing power to younger generations. Businesses must remain ahead of the curve to be successful. At Rich’s, we recently delved into disruptive macro trends across the food landscape, revealing several key insights that food industry professionals can’t ignore to be successful in today’s marketplace.
Unpacking the Demographic Shift
We are experiencing massive demographic shifts and generational changes, which are disrupting the food industry. Baby Boomers are entering retirement, edging out market dominance, while Gen Xers are currently at the peak of their spending power. On their heels are Millennials, a sizeable generation currently entering life stages that exert greater market influence. The values and lifestyles of younger generations, including Gen Z, are markedly distinct from earlier generations and will continue to be a major force for change.
[RELATED: How Walmart Is Appealing to Gen Z]
Increased Snacking Behavior
According to Rich’s proprietary research, 42% of consumers agree that they’re snacking more often. This trend, which was on the upswing pre-COVID, accelerated during the pandemic, as people found themselves spending more time at home – with easy access to their pantries. Younger generations are also influencing this trend, as they tend to have busy, on-to-go lifestyles.
Additionally, we’re seeing a shift in the definition of “snack,” and the type of snacks consumers are choosing. According to Datassential, consumers consider almost anything to be a snack. That’s creating more opportunity for businesses. We have seen an uptick in consumers seeking out “healthier” or “better-for-you’ snacks, but not to the detriment of indulgent snacks and treats. As the field broadens with products and menu items that fit almost any need, we expect consumers to look for more personalization in snacks, choosing options that meet their specific tastes and needs at any given moment.
[RELATED: Associated Wholesale Grocers Debuts Healthy Snacks Assortment]
Personalized Experiences Powered by AI
Personalization is showing up in different ways across the industry. Artificial Intelligence (AI) is everywhere, driving personalization on a broad scale and raising consumer expectations for tailored experiences. As consumers gain more trust in AI, they will come to expect more convenience and personalization.
Consider the “Netflix” experience – where content and choices are curated to personal tastes. Consumers can browse suggestions that are customized for them based on previous purchases, interests, similar shopper behavior, etc. Companies like Amazon and Walmart are taking this experience to the next level, implementing generative AI (GenAI) chatbots that answer product questions and direct shoppers to specific products based on an occasion or need. While we are seeing most of these GenAI applications in durable goods like toys and electronics, curated grocery and food experiences aren’t far off. It won’t be long before consumers are using GenAI to create shopping lists or generate recipes – for example, “Build me a shopping list for a cocktail party with 10 foodies who are celebrating a birthday.”
Personalization has also been shown to boost shopper engagement. Kroger, for example, publicly reported a boost in digital coupon redemption by using AI to pair relevant products with the right promotions for shoppers. At Rich’s, we’ve done extensive research around the “Future of Fresh Bakery,” and have seen further implications for digital coupons in driving impulse purchases.
Embracing Technology + Automation
Operators and retailers are embracing technology as new forms of automation arise to alleviate labor pressures and meet consumer needs. At Rich’s, we’ve been following developments in back-of-house automation across the foodservice market. Operators are deploying robots, cobots (collaborative robots that work alongside humans) and other forms of automation to eliminate repetitive or unwanted tasks.
There have also been new developments in “connected kitchens,” or “smart kitchens,” that integrate appliances, devices and systems to create a more efficient, convenient and automated cooking and food management experience. This creates an opportunity to sync inventory with digital signage to deploy quick promotional pivots based on decreasing or overabundant stock. These developments apply to the grocery market as well, helping retailers maximize efficiencies, minimize food waste and deliver convenience for consumers.
Staying Ahead of the Curve
How can the food industry stay ahead of the curve to remain competitive? The key is to watch for trends, not just what’s trendy. Trends are more than fads; they’re deep, long-term market shifts and evolving changes in consumer needs or behaviors.
As we navigate accelerated change, growing competition and an unpredictable marketplace, it’s imperative for food businesses to understand their consumers. Anticipate what they need before they do. Watch what’s happening in other industries for early signals and inspiration, and then adapt your business to deliver differentiated experiences.
