The analysis came full circle Tuesday morning, with discussions on broad meat trends, the importance of supermarket foodservice and how shoppers view the meat department bringing the 2015 Annual Meat Conference to a close.
Neil Stern, senior partner with Ebeltoft USA/McMillanDoolittle, offered a “Visual Journey of Global Retail and Meat Trends,” with an international look at how retailers are exploring new formats and new trends in visual merchandising and experimenting with new disruptive business models. Held in Nashville, the conference is hosted by the North American Meat Institute and the Food Marketing Institute.
With consumers and their needs more diverse than ever, retailers must “understand and respond or disappear,” Stern said. With the rapid adaptation of technology, he continued, it’s “digisumers” who are calling the shots in retail.
Among Stern’s key points:
- “Local” resonates on freshness, sustainability and community support.
- Foodservice mashups bring theater to retail grocery.
- Retailers must boldly deliver experiences that can’t be duplicated online.
- Experiences must reflect demographic specialization; the Millennial population is 35 percent ethnic.
- Grocers should experiment with new ways to reach shoppers, such as food trucks, curbside pickup, home meal delivery and vending.
- Managing expectations and returns is the key challenge for small formats.
“We’re really seeing profound changes happening in the marketplace,” Stern declared.
Foodservice a must-have
Wade Hanson, principal with Technomic Inc., presented “The Changing Face of Supermarket Foodservice and the Keys to Long-term Success,” in one of the morning’s three concurrent sessions.
Restaurants “are looking at this as a threat to their business,” Hanson said of the evolution and refinement of supermarket prepared foods. “The growth potential is there, much more so than other areas of the grocery industry.” In fact, he said, grocery foodservice can expect 7.5 percent annual growth over the next 10 years.
And in Technomic’s latest consumer ranking of the top 10 foodservice operators, four of them are grocers, including the top-ranked Wegmans, which, along with Mariano’s and Standard Market in the Chicago area, Market Bistro by Price Chopper in New York, and Kroger’s Chef on the Run, Hanson named as standouts in this category.
So important is foodservice to grocery, Hanson asserted, that without it, grocers risk losing the rest of their overall basket. He cited data showing grocery prepared foods with $25 billion in sales for 2014, up $10 billion since 2004, with foodservice being the No. 1 strategic initiative for many retailers.
Hanson pointed to these trends in grocery foodservice for the coming years:
- Breakfast, beverages and dessert are prime opportunities.
- As fresh expands to other channels, grocers will be under pressure to more clearly define and own it.
- Brand loyalty will depend on relevance and customization: “Be on-trend and relevant,” he said, “and adapt to YOUR consumer.”
The morning’s other concurrent sessions looked at growth opportunities in value-added meat and a regulatory update, including such issues as food safety and country-of-origin labeling.
The Power of Meat
Meat and poultry products remain among the top choices for shoppers at retail, but the 10th annual Power of Meat study published by the Food Marketing Institute (FMI) and North American Meat Institute (NAMI) highlights several trends in the way consumers are changing their purchasing behavior.
Drawing on insights delivered by other speakers during the three-day conference, Anne-Marie Roerink, principal at 210 Analytics, which fielded the study, laid out this in-depth look at the meat category as seen through the shopper’s eyes.
The key points include the following:
- Price increases prompted shoppers to seek alternatives — Price increases for both beef and pork caused shifts in buying behavior among 40 percent of shoppers, with most looking for ways to save. At the same time, others returned their focus to quality, convenience and nutrition. The meat purchasing decision tree reflects this dichotomy in the marketplace, with price per pound in first place, followed by appearance in second — a position it lost to total package price in 2011.
- Shoppers open to switching between proteins, cuts and brands — Demonstrating high-price sensitivity, consumers were open to switching within the meat department for cuts with high substitutability, while others sought protein outside the meat case. The use of protein alternatives is led by eggs and beans, with prime reasons being adding variety, health and cost. Millennials are more likely to use meat alternatives for ease of preparation.
- Mega trends affect the meat purchase — Shoppers are also influenced by mega trends, including local sourcing, sustainability, health and wellness, and organic. Shoppers are putting greater effort into making nutritious meat/poultry choices, with an emphasis on leaner cuts and portion control. Local interest is driven by freshness and supporting the local economy, with shoppers defining local as being from within a certain mile radius or their state.
- Alternative channels take some of the fresh dollar — Supermarkets remained the dominant outlet for fresh meat and poultry. Farmers' markets are the greatest source of the occasional purchase, at 15 percent of shoppers. Online meat and poultry sales may grow along with improved availability and growing confidence in quality.
- Meat purchase decision increasingly shifting to in-store — While meat and poultry remained well-researched list items for many shoppers, a greater share made the ultimate buying decision between species, cuts and brand in-store, putting additional emphasis on operational excellence.
- Value-added fast growing but narrow segment — One-quarter of shoppers say they purchase value-added items sometimes or regularly, but for most cost (21 percent) or preferring to prepare items themselves (46 percent) are the greatest barriers to purchase. Regardless of all heat-and-eat, ready-to-eat and value-added solutions provided by food retailing, foodservice continues to win the last-minute dinner decision.
- Full-service counters highly valued — Retailers brought back the full-service meat case and shoppers appreciated it: 63 percent among shoppers with access consider this a store advantage. Among those who don't have access, 36 percent said they wish their primary store had a counter.
- Natural/organic segment continues to grow — A rising share of shoppers say they have purchased natural/organic meat and poultry and most expect to maintain or increase their current purchase level. The top reasons for purchasing natural/organic are "free from" and better health and treatment of the animal. For those not yet engaged in the segment, price remains the largest barrier, followed by seeing no added benefits.
- Meat and poultry provide nutrition and balance to the diet — Across the population, poultry is seen as more important to eating a balanced diet, whereas meat is most highly associated with being a source of important nutrients. Millennials are more likely to associate with functional benefits and less likely to emphasize enjoyment.
- Winning while faced with volume pressure — Shoppers’ comments for improvement point to better everyday and promotional pricing; better quality; better in-stock performance and variety in package sizes, cuts, and specialty items; and customer service excellence.
The Power of Meat study was sponsored by the Cryovac Brand, a part of Sealed Air’s Food Care Division.