Rise of the hybrid consumer polarising food sector
Monday, May 27, 2013
By Joe Dermody Middle ground food producers are taking a hit as shopping trends have polarised towards low cost and high value goods, a Rabobank retail report says. Rabobank advises food companies, food retailers, and food service companies to take account of the rise of the hybrid consumer in their sales strategies.
The report notes that mid-market consumers are trading down on everyday value-for-money items, such as basic groceries.
The hybrid consumer is using the money saved on groceries to trade up to premium, high-end brands in supermarkets and fine dining; goods which tick an emotional and/or social box. As a result, middle-ground players are struggling to retain market share.
Rabobank senior analyst Marc Kennis, said: The implications of this market trend are profound and touch on areas such as product offerings, distribution channels, marketing, and brand management.
Given the driving forces of hybrid consumption, i.e. womens increasing role in household spending and the growing importance of Millennials [generations Y and Z], we believe that hybrid consumption is a long-lasting phenomenon. Therefore, food processors, food retailers, and food service companies alike will need to adapt or risk fading away.
To capture the hybrid market, Rabobank suggests that retailers should offer healthier alternatives, use more natural ingredients, and build in corporate social responsibility and sustainable business practices. It cites Pernod Ricard as a company that has been successful in premiumising its product offerings.
Rabo suggests retailers offer value products within the premium segment and premium products within the value segment to cater to consumers polarised needs. Retailers can also use value products to sell premium products.
Rabo cites one well known UK-based coffee chain offering low priced coffee to go, linked to premium sandwiches.
It has identified the three main forces driving this polarisation: The growth of womens purchasing power and increasing influence over household spending; food retailers discounting strategies; and the macro- economic impact of the global recession, which has accelerated the existing market dualisation.
Research indicates women are more objective than men when it comes to food purchasing decisions, said Mr Kennis. Additionally, younger generations who grow up using social media are more likely to make food choices based on merits rather than on the specific brand loyalty.
The advent of discounters has added to consumers options to trade down, and in recent years private label products have increased trading up options.
Increased use of the internet as a tool to compare products and prices has also led to greater consumer awareness regarding food product purchasing. Irish Examiner Ltd. All rights reserved