retail news in context, analysis with attitude

Technomic is out with a new study, "Food Industry Transformation: The Next Decade," in which it makes a number of observations and prognostications about the food industry. Among them:

• "The industry evolution toward fresher, higher-quality products will cause a fair amount of market share shift, including a realignment of the retail food channel.

"Market share of traditional retailers (supermarkets, mass merchants, supercenters) will fall from 71% of retail-food sales to 62%. Nontraditional retail’s gain from 29% of the market today to 38% in 10 years will be driven mostly by the online and fresh-format channels, each expected to increase their share of the market from slightly more than 2% of retail sales to close to 6% within the decade.

"In distribution, online distributors’ 20% annual growth will dominate, upping the segment’s share from 1% of distribution sales today to 4% within 10 years.

"Prevailing trends favor independents, small chains and fresh prepared foods at grocery stores in the share battle within foodservice. Small chains and independent restaurants will grow share by three percentage points; supermarket fresh prepared foods will rise by one percentage point."

• "Generation Z will be the least likely to view advertising messages on a TV and will opt instead for using tablets and mobile phones. Food manufacturers should view this as an opportunity, not a challenge.

"The trend opens up dozens of lower-cost, more finely targeted chances to put messages in front of consumers. Manufacturers should start adapting their marketing creative to include shorter videos like 5-second pre-roll ads and banners for mobile screens."

• "Expect a replay of the popular outcry that purged trans fats from the U.S. food supply— likely directed next at a maligned additive like sodium, high-fructose corn syrup and/or phosphates—in the next 10 years.

"The supply chain of 2025 will reflect consumers’ growing insistence on foods that contribute to the health of their families, the planet and society. Wellness and sustainability will lose their elitist associations and inform purchasing decisions in all segments of the food industry."

• "The growth in craft beer’s popularity is perhaps the most salient example in the food industry of a premium product taking market share from mass-market offerings, enticing affluent consumers at both restaurants and bars and in retail aisles. In 2014, craft beer and hard cider posted double-digit gains in volume while domestic light and regular beer shed volume. This trend will accelerate the next 10 years, as craft beer appeals widely to men, Hispanics, and Gen Xers and Millennials."

• "Staffing models will bow to popular pressure against low wages. Brands will trade higher wages for lower turnover and relief from bad PR ... Progressive investments, like Starbucks’ tuition assistance or Whole Foods’ on- site clinics, will be tools in the contest to attract the best talent ... New technology, from labor scheduling software to digital ordering and fulfillment services, will help contain labor cost inflation as sales increase."

• "Consumers will be more ethnically diverse but also polarized in terms of age and income. They will be interested in upscale food experiences or in maximized value ... Consumers will value healthful food (fresh, GMO-free, local, organic, minimally processed, etc.) and corporate social responsibility ... Older and younger consumers will drive more urbanization, favoring independents, digital channels for food and specialty distributors ... Consumers (and trade customers) will demand that companies be totally transparent about business practices (not just ingredients)and corporate social responsibility."

The study is a instructive one, and you can download it here.
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