Millennials continue to be a hot topic in the health food industry but previous generations such as Gen Xers and baby boomers also play an important role in bringing in revenue for food retailers. With grocery stores being just one of the major players in the health food market, grocers need to identify key marketing techniques that are needed to maintain customer loyalty and bring in more health-focused consumers. A new study conducted by New Hope Network in partnership with NMI reveals key consumer targets and marketing strategies to reach such consumers.
Although millennials have become a target demographic for health food companies and grocers, baby boomers and Gen Xers have been found to contribute a significant amount revenue to the health food industry as well. However, since millennials dominate the current consumer demographic because of their size (there are about 80 million millennials in the US), it makes sense that food companies have been focusing on marketing mainly millennial-targeted products. Something to consider though is the fact that this demographic consists of individuals who are aged between 21 to 41, which means that the younger end of this spectrum is unlikely to have enough funds to support purchasing niche and expensive health food products.
“There is a big group of millennials who are spending less; they are not spending the high dollar amounts yet,” said Maryellen Molyneaux, NMI Managing Partner. “They are different in income and stage of life, and it affects what they do and spend their money on. The older millennials will spend on family type categories or stress needs. A lot of things are happening; you have to know who your consumer is.”
Molyneaux continued by explaining that millennials are increasingly transitioning online for their health food shopping needs. When compared to the year 2007, millennials drove a 190 percent growth in their online health food shopping habits in 2017. However, Gen Xers were also found to have a significant increase (91 percent) in their online health food shopping habits between that time period, which indicates that e-commerce is a key tool for the healthy and natural foods industry. Baby boomers, on the other hand, were not found to have a notable increase (24 percent) in their online shopping habits, which means that grocery stores are still their primary source of grocery shopping.
However, according to Molyneaux, millennials are more comfortable online because they have been raised in a digital age but they are not as knowledgeable about the health food industry as baby boomers are. This is because baby boomers are the generation that started the natural and healthy product movement. In addition, the study found that although boomers are a smaller demographic, they tend to spend more on health food products than any other generation. This trend is important for food companies to consider as they continue to roll out premium and niche products with higher price tags.
So, instead of segregating consumer groups based on their age, NMI divided the general consumer demographic by their shopping habits in the health food industry. The organization created five consumer profiles: The Eat, Drink & Be Merry group, Fence Sitters, Magic Bullets, Food Actives and Well Beings. Only 17 percent of shoppers fall under the Eat, Drink & Be Merry Group that is associated with shoppers who do not concern themselves with health trends. Fence Sitters, which are consumers that want to be healthy but don’t always follow a healthy lifestyle, make up 23 percent of shoppers. The Magic Bullet group makes up 20 percent of shoppers and they usually look for quick and easy healthy meal solutions. The mainstream healthy crowd makes up only 14 percent of consumers and falls under the Food Actives group. Whereas the largest health-focused group, accounting for 26 percent of health-conscious shoppers, falls under the Well Beings group.
Surprisingly, baby boomers have been found to make up 34 percent of Well Beings, while millennials make up 49 percent of this demographic. In addition, Well Beings account for one-third of all online sales of natural and healthy products. Molyneaux refers to this consumer demographic as the “leader group,” because of their ability to influence other consumer demographics. Well Beings have also been noted to drive in-store sales as they search for products that benefit their health and recommend such products to other demographics. They are considered as early adopters that can help sway Fence Sitters and Magic Bullet consumers.
“When you get them in and have used transparency and knowledge to attract them and they know who you are, they are more likely to buy and buy repeatedly and talk about you and your knowledge. That is how you bring more people in,” said Molyneaux.
By tapping into this key demographic, grocers are more likely to build customer loyalty and bring in more consumers through word of mouth. With online shopping being a key driving factor in Well Beings’ health food shopping habits, all grocers should consider investing in an online presence. This can even be done for smaller grocery chains that cannot provide home delivery options.
“No matter what size retailer you are, you must have an online presence. Do it on your own, with a consultant or in partnership with a distributor or brands. It may sound like I am preaching to the choir, but there are a lot of independent retailers who think that they can’t. But they can and they should,” she said.
Instead of replacing brick and mortar stores with e-commerce websites, grocers are advised to simply add an online website to complement their current services. This will result in faster sales conversions as consumers regularly look online for specific products before going to a store to purchase them. An online presence can confirm a sale long before a consumer steps into the store. Ultimately, it is all about the connections that grocers make with their customers.
In addition, grocers can stand out in the health food market with a presence online and in-store because they can eliminate any shortcomings associated with simply using one of these shopping destinations. This is because brick and mortar stores tend to be associated with inconveniences such as long drive times, long waits in cash lines, parking issues, poor customer service, possibly higher prices and short store hours. In contrast, e-commerce health food stores have shortcomings such as not being able to physically touch an item, having to pay for shipping, waiting for delivery, having to return items through the mail and having perishable food packages left at the door.
By bridging the gap, grocers can reach out to consumers from the comfort of their homes and let them know about special offers in-store. Grocers can also capitalize on the fact their food items can be considered to be fresher than delivered items. According to Molyneux, in the next two years, consumers plan to spend more on fresh food items.
The fresh food segment is the only natural food segment that consumers continuously shop for in brick-and-mortar stores. In fact, 81 percent of the general consumer population shopped for natural and healthy products in grocery stores during the past three months. By increasing fresh food offerings in-store and investing in more customer service, grocery stores are more likely to attract more customers that come back continuously for the food offering and great service. At the end of the day, grocery store shoppers want memorable experiences, products and services that they cannot find online.