The Salt
4:00 pm
Wed July 11, 2012

Wake Up Call To Grocery Stores: Young People Shop Around

Originally published on Wed July 11, 2012 10:31 pm

Supermarkets have spent decades catering to the needs and wants of baby boomers, and now the millennial generation is disappointed with what they're finding at traditional grocery stores, and are shopping elsewhere in greater numbers.

In fact, a new market research report called Trouble in Aisle 5 reports that millennials buy only 41 percent of their food at traditional grocery stores, compared to the boomers' 50 percent.

Instead of buying the same brands from the same store every week like their baby boomer parents or grandparents, millennials, or those born between 1982 and 2001, value convenience and freshness over brand or store loyalty, the report says.

The study, a survey of 2,000 adult grocery shoppers in the U.S., was conducted by Jefferies, a global investment bank, and AlixPartners, a business advisory firm.

Differences may stem from the millennial generation's inclination to multitask, even at the supermarket, the report suggests. These results mean that the new generation expects food to be very convenient, but they also don't want to compromise freshness or value.

"Millennials, generally speaking, are not a one issue generation. Natural and organic, flavor, and convenience mean a lot," says Scott Mushkin, Managing Director of Food and Drug Retailing at Jefferies.

And above all, convenience is key. Grocery delivery services, convenience stores, and online retailers are becoming increasingly important food sources for the latest generation of shoppers.

This need for instant access seems to be very characteristic of millennials. "They treat their multi-tasking hand-held gadgets almost like a body part," says a study of the generation published by Pew Research Center, and covered by NPR in 2010. "More than eight-in-ten say they sleep with a cell phone glowing by the bed, poised to disgorge texts, phone calls, emails, songs, news, games, and wake-up jingles," the Pew study reports.

"Millennials are channel surfers, jumping from one retail channel to another because that's what suits them," says David Garfield, Managing Director at AlixPartners. "Boomers are more consistent in where they shop and what they shop for. How many channels you communicate in, in your life, dictates how you act in the shopping world," he says.

As boomers age, the financial uncertainty of retirement keeps many buying just the basics, which can be bad news for grocery stores. "On some levels, boomers are not becoming great customers because of where they are in life," Mushkin says. "Millennials, on the other hand, are good customers. They seem to want to pay more for attributes that they value."

However some trending items, such as fresh and organic foods, seem to be important to both generations. "Millennials seem obsessed with what they put in their bodies and boomers are obsessed with making their bodies last as long as possible," Mushkin tells The Salt.

And this next generation of shoppers is a growing force in the marketplace. Millennials will make up approximately 19 percent of Americans in 2020, while at the same time, the population of baby boomers in the United States sinks below 20 percent, the study notes.

Some big grocery store chains, like Safeway, are incorporating the needs of millennials into their future business plan by offering store-brand organic products, grocery delivery, and smartphone apps. Even staple brands like Campbell's are now trying to embrace organic trends. But a lot of these changes don't seem to be translating into dollars at the checkout.

"There seems to be this trend that they [millennials] will go to Amazon or Target or Wal-Mart for Cheerios or Diet Coke, but they'll go to Trader Joe's or Whole Foods for their fresh and organic needs," Mushkin says.

Mushkin says that the study provides good news for natural foods stores, as well as mass merchants who deal in groceries and more, like Target and Wal-Mart. "Mass merchants are becoming the cross section; everyone goes there for different reasons. But it's a really tough study for the traditional grocery business."

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