By Barb Renner, vice chairman, Deloitte LLP, and U.S. consumer products leader, and Brian Baker, managing director, retail and consumer goods, Deloitte Consulting LLP
Originally printed in the February 2021 issue of Produce Business.
Read Jim Prevor’s Commentary below
COVID-19 has significantly changed how we think about, shop for, prepare and even stock up on fresh food. According to Deloitte’s new report, “The Future of Fresh: Patterns from the Pandemic,” the anxiety of shopping in store, combined with ongoing health and financial concerns, has disrupted consumer buying patterns and created new opportunities for businesses. The study, which surveyed 2,000 U.S. consumers (aged 18 to 70), provides a view into new patterns of consumer behavior and dives into trends around shopping frequency, new priorities among purchase drivers and differing consumer reactions to stockouts.
Consumers are shopping less frequently
More than half of consumers surveyed (54%) feel stressed by in-store shopping; that stress is resulting in fewer visits to stores, and less frequent shopping trips. In the past year, the numbers of respondents who shopped for fresh food multiple times a week dropped by half (30% in 2019 versus 15% in 2020). In fact, based on credit card analysis, grocery stores are seeing less of some of their best fresh-purchasing customers as consumers who shop at least once a week comprise 80% of fresh food sales.
Safety and stockpiling alter purchase decisions
Consumers stockpiled food at the onset of the pandemic and continue to do so to some extent. This increased demand and other supply chain disruptions created unprecedented challenges for food manufacturers and grocery stores, resulting in stockouts for many categories, including fresh food. The survey found that nearly two-thirds (65%) of consumers responded that they had been unable to buy the fresh food they wanted because it was out of stock. Instead of going to another store, consumers are buying alternative food items or simply going without in an attempt to minimize shopping trips. When faced with a stockout during the past four months, more than 40% typically purchased an alternative fresh food item, and over half of respondents left the fresh food category entirely either to buy a frozen or processed replacement (28%) or not buy anything as a replacement (26%).
Consumer anxiety and product availability give rise to new priorities, purchase behaviors and accelerated trends for the future of fresh food.
Until recently, safety was expected and not a primary concern in the fresh food category. However, consumers are increasingly focused on safety — for themselves, other shoppers, store employees and the workers who produce food. Consumers now indicate that safety is virtually of the same importance as price when it comes to fresh food selection (nearly 90% of respondents say these two categories are important purchase drivers).
According to Barb Renner, vice chairman, Deloitte LLP, and U.S. consumer products leader, “Shifting consumer priorities and new habits brought on by COVID-19 continue to impact the fresh food category. With consumers spending less time commuting, they have more time to prepare fresh meals. However, they are conflicted and want to avoid the anxiety of shopping at multiple stores to purchase the fresh items they want. As consumers reduce the frequency of their fresh food purchases, there is a clear need for retailers to better understand and engage these emerging consumer personas to drive omni-channel growth.”
New consumer personas drive disruption and innovation
Advanced analysis based on shopping frequency, amount of fresh food purchased, perceptions on price, channel usage, stress while shopping, and experience with stockouts have identified two distinct consumer profiles: Conventional (60% of those surveyed) consumers who have a traditional approach to their fresh shopping at the grocery store, and Contemporary (40% of those surveyed) consumers who are driving innovation in the fresh food category in a variety of ways.
• Contemporary consumers value a new kind of convenience that now includes availability. Whereas 68% of Contemporary consumers have bought at least some fresh food online, only 9% of Conventional consumers have done so.
• While trust had previously been a barrier to online sales of fresh food items, more than two-thirds (68%) of Contemporary consumers now trust their assigned in-store shoppers to select the best quality fresh food items available.
• Contemporary consumers are more willing to pay a premium for fresh food (75% compared to 62% of conventional consumers).
• Contemporary consumers are also buying more. They’ve increased their fresh purchases in the past four months at a level almost double that of conventional consumers (50% versus 27%, respectively).
• Nearly two-thirds (64%) of contemporary consumers felt brand was important when buying fresh food, but they’re not necessarily loyal. They’re more likely to be satisfied with replacement items (64% versus 36% for Conventional consumers).
• Contemporary consumers are also twice as likely to show interest in subscription boxes (59% compared to 26% for conventional consumers).
According to Brian Baker, managing director, retail and consumer goods, Deloitte Consulting LLP, “Despite the ongoing challenges fresh food retailers face, new consumer buying patterns are driving innovation and new opportunities. For grocery retailers, predicting what consumers are likely to purchase is essential to keeping core items in stock. Plus, in the event of stockouts, if retailers can better understand the patterns of both Conventional and Contemporary consumers, they can help steer them toward suitable replacements. Meeting consumer demand for healthy, sustainable and safe fresh food items, as well as providing new alternatives, will keep consumers returning across channels.”
Deloitte provides audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500 and more than 7,000 private companies. Now celebrating 175 years of service, Deloitte’s network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 312,000 people worldwide make an impact that matters at www.deloitte.com.
Three Types of Change to Consider Post-Pandemic
Our projection is that most of the behavioral change we observed during the pandemic will be consciously tossed aside as people express their resentment that such a situation kept them constrained.
By Jim Prevor
There is no question that if you study consumer shopping behavior in the midst of the COVID-19 pandemic, you find many behavioral chances from pre-pandemic behavior. There also is little question that these changes can be divided up into three separate categories:
First, there were changes that “leaped us ahead.” These are changes that would have happened anyway, but the pandemic led to their much more rapid adoption and the fast rollout of needed infrastructure. This is probably true of the various delivery services. Even here, however, there is likely to be a fallback post-pandemic toward the pre-pandemic norm. In other words, people who have experienced these delivery services, and liked them, are likely to continue to use them. However, even that is not so simple. Most obviously, with people back at work, on business trips or vacations, or if there are social activities with family and friends, if nobody is going to be home, it might just be easier to stop at a store and pick up what you want.
Second, there are the “highly-unlikely-to-persevere” changes. Yes, during the pandemic, many consumers went to stores or ordered online, and when their preferred product was unavailable, they accepted substitutes. This is nothing new. We hear from our elders many stories about not being able to get things during the rationing of World War II, whether preferred foods or women’s nylons. Many families established Victory Gardens both to express patriotism and to make their own lives better by growing items that were often unavailable in stores. Yet, when the war was over, the gardening effort went down fast. We have no reason to believe that post-pandemic consumers will continue to accept that they are unable to get the goods they wanted. Items… brands… value-added… the absence of any of these things is likely to make consumers do what they did pre-pandemic: Go shop elsewhere.
Third, we have changes that have occurred which may or may not survive post-pandemic. Many foodservice distributors, for example, got into the “box” business often with interesting products, conveniently delivered. Will this direct-to-consumer channel survive post-pandemic? It is difficult to know. Certain products, notably citrus, have thrived during the pandemic, presumably because consumers approach these products, rich in vitamin C, as an ideal product when health is an issue. Will that habit survive when health is no longer such an obvious dilemma?
Big screen TVs have experienced a sales boom during the pandemic as have the snacks that consumers make for themselves when watching their favorite shows. On the other hand, food that normally would be sold in movie theatres was barely sold at all. Will people go back to movie theaters? The existence of better-at-home experiences and the explosion of streaming services, such as Disney+ and Netflix, indicate that movie theatres may not bounce back, but young people like to date away their parent’s gaze, and there is a certain communal experience in seeing things on the big screen, with everyone breaking into applause and cheers when the villain is defeated. It is hard to say what will happen here.
Our projection is that most of the behavioral change we observed during the pandemic will be consciously tossed aside as people express their resentment that such a situation kept them constrained. Just as the Roaring Twenties followed the horrors of World War I and the great influenza pandemic, the “Spanish Flu” of 1918, so a new age of reckless release is likely to follow the mass vaccination program that protects almost everyone from COVID.
The idea that consumers will not all think alike — that what Deloitte is calling the “Conventional” vs the “Contemporary” consumer will see different paths ahead — is almost certainly true. Yet, it is always true that consumers differ in their willingness to adapt, willingness to change, willingness to try new paths. It is also true that the rate of change accepted by different people is also always an issue.
Though the exact moment of takeoff may be uncertain, it is in the American spirit to despise the coils of this pandemic and burst through them. We doubt all the lessons deemed “learned” in this pandemic have actually been learned at all.
Which, of course, ends with a somber note. The 1920’s was a wild time — Gross Domestic Product zoomed up over 40%, flappers were dancing, the Jazz Age and Harlem Renaissance redefined the culture, Prohibition was flouted and ultimately repealed. Yet in 1929, it all came crashing down, and a decade of Depression and another horrible war came to haunt us. Let us hope that we can avoid a similar fate.