The Changing Consumer

June 22nd, 2011 | Simcha Weinstein | Comments Off on The Changing Consumer

In the past 2 years a question that I am asked, perhaps more than any other question, is how has the downturn in the economy affected our industry? How have consumers adjusted their shopping patterns to this new economy? It’s pretty much just assumed that a marketplace like the organic and natural foods industry would suffer significantly, since the cost of these foods can be considerably higher than buying conventional food products at the supermarket. Ironically, while overall food dollar sales are down in the U.S., organic and natural foods showed pretty healthy increases during 2010.

According to Convergys’ 2010 Consumer Scorecard Research study, only 5% of customers in 2010 defined good value as “paying the lowest price.” What we’re seeing is that yes, shoppers are becoming more deliberate and more cautious in how they spend their dollars, but they are not automatically reaching for the cheapest, least expensive products. What we are seeing is a shift away from the rampant consumerism that we saw prior to the recession, with a movement towards more “value-driven” purchases, but with “value-driven” having to do more with the connection a shopper feels with their products as opposed to the actual cost of the product.

The Chinese use the same symbol for crisis as they do for opportunity. From the ashes of this economic crisis, we are seeing an opportunity for consumers to truly look at what they value – what matters to them? So, the cutback that we are seeing hasn’t really been an-across-the-board cutback in spending. It’s been more an elimination of unnecessary purchases. So, if you value the food that you put into your body, and you consistently purchase organic foods, it’s unlikely that you will suddenly abandon your lifestyle choice and begin eating conventional food as a way to cutback on expenses. It’s much more likely that you cut back in areas that seem like more “luxury spending”. Perhaps you cut back on your movie-going or drink less expensive wine. These types of moves are much more common than giving up your lifestyle food choices. As a matter of fact, you could even make the case that this recession has helped people to really clarify what it is that they value and how they wish to spend their money.

Your regular customers are not likely to abandon shopping at your store because of this recession, but they have probably become smarter and more focused shoppers. If your organic bananas are higher than a competitor’s your shoppers are more likely to know that now. What now makes it onto their shopping list may have changed as well – less asparagus and more broccoli perhaps. If we’re smart we won’t just see this recession as some type of temporary phase. It’s best to view this more as the norm moving forward. Perhaps the biggest challenge that lies ahead will be a demographic shift. Baby Boomers, who have fueled consumer consumption in the organic and natural foods industry over the years and who also have helped lead us out of the most recent previous recessions, will not be in a position to lead the way out of this recession as they near retirement and conserve savings. Instead, the up-market segment of Generation X (aged 29–45) and the leading edge of the young Generation Y (aged 18–28) will lead the recovery. Retailers will have to adapt their plans and approaches to appeal to this new generation of consumers.