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Read much consumer research and you start to wonder whether people are passing the time during the recession by compiling lists of all the things they’ve stopped buying. Downturn or no downturn, though, people still need to eat, and supermarkets haven’t become retail ghost towns. But that’s not to say the country’s eating and grocery-shopping habits have been untouched by the economy. In the grocery store as elsewhere, people have become more focused on getting the most mileage for their spending, with (as polling data and expert opinion agree) a whole shopping basket of consequences for this market.
In Search of Cheapness
Given the urgency they feel to economize at the supermarket, many people are looking askance at the prices they find there. In a Synovate report released this month, based on July polling, 65 percent of U.S. respondents said they think grocery items are “overpriced and should be cheaper.” Seventy-eight percent agreed that they “will switch food brands if I find a cheaper alternative.” Such steps have included a broad-based shift toward private label goods, as reflected in the headline this summer on a Mintel report about Americans’ supermarket habits: “Private label products not just for penny-pinchers.”
Cooking is no Alternative
While consumers’ recession-induced focus on saving money at the supermarket accords with conventional wisdom on the topic, the same can’t be said of the supposed trend toward more cooking of “comfort foods.” Research conducted throughout 2009 by The NPD Group (and compiled for this year’s edition of the Port Washington, N.Y.-based company’s annual “Eating Patterns in America” report) throws cold water on the notion that Americans have spent the past year simmering more home-cooked meals to fortify themselves against the hard times.
Instead, says Harry Balzer, NPD’s VP and chief industry analyst, Americans have been microwaving their way through the recession. Use of the actual stove -- i.e., the kitchen instrument that cooks food as opposed to merely thawing it out and warming it up -- has fallen to new lows. “Americans are eating in their homes,” he says, “but they’re microwaving, not cooking.” He adds that the increase in microwaving “was entirely in frozen foods,” and not in any use that would qualify for the term “cooking.” Microwaving had been flat for the previous 20 years, but it surged last year as the recession prompted consumers to shift from takeout foods to less-expensive microwaveable products -- say, frozen pizza rather than pizzeria pizza.
If Americans were looking to food for comfort in the past year, it was more likely to be in the form of a snack and a beer than a slow-cooked pot roast. A recent Mintel report pointed to potato chips as a category that has performed well in the past year after having been flat earlier in the decade. Bill Patterson, senior analyst at Chicago-based Mintel, notes some other categories that have fared well during the economic downturn. “Comfort-type foods that have benefited include pancake mixes, eggs, butter/margarine, salty snacks, beer, cream and creamers and sweet spreads,” he says.
Healthy Eating as Casualty
That roster of items wouldn’t exactly qualify as “health food,” and this points to another supermarket trend of the past year: as The NPD Group puts it, healthier eating has been “one of the big casualties” of the recession. Price is an obvious factor, since, as Balzer notes, healthier foods tend to be more expensive. In any case, consumers’ oft-proclaimed intention to pursue a healthier diet could be fragile. “I think they want to eat healthier, but they don’t,” he says, adding an allusion to lyric by Eddie Vedder of the band Pearl Jam that says we “change by not changing.” And consumers sometimes make do with a pinched sense of what constitutes healthy eating. “We eat healthier versions of a food we shouldn’t be eating at all,” says Balzer. And even that limited step fell victim to the recession, as supermarket shoppers focused more intently on price.
That’s in sync with the view of Mark Berry, EVP of shopper-insights research at Synovate in New York. Mothers see themselves in a “nurturing” role for the household and want to provide healthy foods. But with the recession imposing financial constraints, “their choices are influenced by the need to be efficient acquirers for the household,” he says.
Indeed, there’s no underestimating the degree to which consumers’ behavior has been influenced by the hit their finances have taken (or appear in danger of taking) because of the recession. Berry identifies “fear” as “the major filter through which consumers’ purchase decisions have been made” during this period. He suggests that brands and retailers have a kind of “informal contract” with their loyal consumers, who customarily make at least some of their purchases through those sources. But the financial fears brought on by the recession have put such relationships into play.
“Consumers are reconsidering all the products they buy and don’t buy,” says Berry. “It was as if all of these contracts came up for bid and were reconsidered at the same time,” he notes. “The price/value equation as a part of this contract was deliberately thought through for most, if not all, consumers across the socio-economic scale.”
Convenience is still crucial to consumers, as increasing use of the microwave testifies. But the recession has elevated the relative importance of what things cost. “The investment of our money has become a little more important than the investment of our time,” says Balzer.
Price is not the Only Factor
Inevitably, these attitudes have exerted downward pressure on consumers’ supermarket expenditures. While you’d expect the decline in restaurant dining to be somewhat offset by a rise in grocery purchases, a large minority of Synovate’s U.S. respondents -- 39 percent -- said they’ve been “spending less on food and other supermarket items than I did 12 months ago.” On the simplest level, people may see that they’ve got plenty of food in the pantry and decide to use it up before buying more, Berry says: “I can use up what I have.” Conversely, they may stock up in a fashion designed to economize: 58 percent said they “buy grocery items in bulk to help save money.” And, adds Berry, consumers “trade down” to lower-priced products while buying themselves fewer luxuries and treats.
For some brands, says Berry, “the economy has come to them.” He cites Walmart as a prime example, with the brand’s long-standing value positioning putting it in sync with consumers’ mood as the recession deepened. For others, though, it has been a challenge -- but one their advertising can help to cope with.
Despite the current importance of price, it’s not the only factor food marketers can address in their advertising. Berry says it remains important for advertising in this category to forge an “emotional connection” with consumers and “tug on the emotive part of the brand.” Patterson also emphasizes that price isn’t all that matters to consumers. “One theme seems to constantly reappear in our research, and that is the need for consumers to understand the ‘value’ of their purchase,” says Patterson. “The perception of value would appear to be more important than price.”
Above all, Berry says, “brands need to stress innovation. With many consumers thinking about price/value, marketers have to create impactful innovation more than ever.” That dovetails with Balzer’s observation that the downturn has not squelched consumers’ interest in innovation in supermarket goods. “I don't think the recession has stopped us from wanting new and novel things,” says Balzer, even if the bad economy has led marketers to cut back on new-product launches.
One saving grace is that consumers don’t necessarily think an advertised food must be a more expensive food. “I don't think people see advertising and see it as an expense and infer that the brand must be more expensive,” says Berry.
On to the Recovery
What further shifts can we expect to see in consumers’ supermarket behavior when the economy finally recovers? Patterson points to a number of categories that suffered during the recession but could enjoy a “reasonable recovery,” including bagged salad, refrigerated foods/ready meals, organic/natural food and beverages, “functional foods” and premium-brand alcohol.
The aging of the U.S. population, meanwhile, portends growth for better-for-you foods, notes Balzer. “The health trend generally ends up centering around older consumers,” he says. Older people are the ones who care about health, he says, so they’ll drive the increase in use of healthy foods. An NPD report in July cited such “generational influences” as it put organic foods atop the list of categories expected to flourish during the next 10 years, with a 41 percent increase predicted over the course of that period. NPD also predicts a rise in “in-home snack occasions,” with morning snacking expected to grow 23 percent between 2008 and 2018, outpacing the growth in snack occasions during the afternoon (20 percent) and evening (15 percent).