Retail Report - Hass Avocado Board
Transcription
Retail Report - Hass Avocado Board
Retail Report Retail Outlook and Forecast to Build Hass Avocado Retail Sales 2014–2015 HASS Avocado Board | 230 Commerce, Suite 190 | Irvine, CA 92602 TABLE OF CONTENTS Key Opportunities..................................................................................... 4 Retail Facts, Figures & Trends.................................................................... 5 Food Price Inflation.........................................................................................5 Fruit & Vegetable Prices..................................................................................5 Retail Store Performance................................................................................6 Market Dynamics.......................................................................................6 A Closer Look at the Retail Landscape........................................................7 Online Grocery Shopping...........................................................................9 Other Projected Trends.................................................................................10 Snacking...................................................................................................11 Breakfast..................................................................................................12 Consumer Facts, Figures & Trends........................................................... 13 Organic.....................................................................................................13 Locally Grown ..........................................................................................14 Food Safety...............................................................................................15 Sustainability............................................................................................16 Targeting Consumer Demographics..............................................................17 Millennials................................................................................................17 Hispanic Shoppers....................................................................................18 Closing.................................................................................................... 19 Appendix................................................................................................. 20 Top Fruit Categories......................................................................................20 Retail Top 20..................................................................................................21 Works Cited...................................................................................................22 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 2 PREFACE Each year the Hass Avocado Board (HAB) tracks and monitors the retail trends, changes and challenges that impact the retail and produce industries. In order to minimize your time reading, HAB has developed this report to provide you with key learnings in a quick and easily digestible format. The report focuses on retail with an emphasis on fresh produce. OVERVIEW Retail sales of fresh produce are expected to continue to grow as consumers place a greater emphasis on eating healthier, more nutritious foods. These changing trends are resulting in some dynamic shifts in the way consumers shop, which in turn are forecasted to impact sales at all store formats and online shops. Fresh format stores are gaining market share as consumers shop multiple store formats for their grocer needs. In the online space, Amazon Fresh has emerged as a dominant player in the retail landscape. Mobile marketing has become significant in reaching consumers as they use their Smartphones to compare prices, order groceries, find nutritional information and recipes, and participate in loyalty programs. Snacking and breakfast eating occasions are also expected to increase as healthier food options. The years ahead will present some challenges and significant opportunities for Hass Avocado growers. While this report cannot highlight every issue facing retail today, it does highlight the industry trends for 2014-15 and calls attention to factors that may impact future retail grocery, and in turn, Hass avocado sales. Visit hassavocadoboard.com/retail to learn more about HAB’s retail research and data program and how it’s helping stakeholders increase category performance. Emiliano Escobedo Executive Director HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 3 KEY OPPORTUNITIES & SUGGESTIONS • As we look to 2105 and beyond, shifting consumer demographics will create competitive challenges for both retailers and manufactures. As consumers’ age and the Hispanic and Asian populations increase, retailers have the opportunity to appeal to specific shoppers. • Convenient, healthy food options, especially for breakfast and snacking, will be a focus at retail. This bodes well for produce because nutrition and healthful eating, vegetable and fruits are taking center stage on plates. Avocados can be marketed and cross-promoted with other healthy food items. • To remain competitive, retailers can benefit by differentiating themselves from other store formats. It will be important for retailers to integrate online and in-store models of a multichannel platform to increase market reach. • Research suggests that consumers will find pleasure in simpler food with a shift towards home cooking. A healthy and holistic approach to eating is also projected to increase. Avocados are ideal to promote as a staple in homemade meals. Encourage retailers to utilize social media platforms to share recipe and usage ideas. • As consumers increasingly seek more about their food and where it originates, the trend towards local, organic and natural are expected to remain significant. Food safety and sustainability policies also remain important with consumers. HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 4 RETAIL FACTS, FIGURES & TRENDS Food Price Inflation Returns to Historical Norm The United States Department of Agriculture’s Economic Research Service suggests that food price inflation is on track for normal annual inflation. Relative to 2012, in 2013 prices rose considerably for poultry, eggs, fish, and fresh vegetables. Over the past 20 years, grocery store prices have risen by an average of 2.6 percent per year.1 This assessment is based on an assumption of normal weather conditions. Severe weather events could potentially increase food prices. As an example, the drought in California could have a price impact on agricultural goods that are produced within the state. Fruit and Vegetable Prices In 2014, the food, food-at-home, and food-away-from-home consumer price indexes are expected to increase 2.5 to 3.5 percent over 2013 levels. (see Fig. 1).2 Prices are rising for a range of food staples, from meat and pork to produce, squeezing consumers who are struggling with modest wage gains. Fig. 1. Source: Bureau of Labor Statistics, 2014. Forecasts by Economic Research Service. HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 5 Retail Store Performance Retailers can evaluate alternative ways to address the consumer need for value, convenience and safe foods by focusing their growth strategies on the overall A key growth area shopper experience. Today, price and convenience continue to trump other for retailers is consumer trends in attracting attention in store. Health and wellness-based to offer fresh foods themes are the third most common as a convenient, platform for displays behind price-only and snack and meal solutions. A key immediate solution growth area for retailers is to offer fresh foods as a convenient, immediate for shoppers. solution for shoppers. Additionally, improved shopper engagement, digital and mobile integration and greater precision targeting will create the next-generation shopping experience. Market Dynamics Technology is expected to be the most critical catalyst of change in grocery retailing. Mobile technologies are already transforming the shopping experience. An increasing number of people will depend on their smartphones for every shopping transaction from in-store navigation, loyalty programs, and mobile wallet payments to price comparisons. With the evolving technology, there will be more data available that can be used to build shopper engagement strategies to offer greater shopper personalization. Retailers and brands will work together to include personalized shopping lists, brand savings alerts, mobile checkout, recipe services, and product ratings and reviews. Technology is expected to be the most critical catalyst of change in grocery retailing today. Shifting consumer demographics will also create competitive challenges for both retailers and manufactures. Hispanics and Asian populations are forecast to increase 41% and 37% respectively, from 2010 through 2025. Also, age-based shifts will impact the marketplace. The 65+ -year-old segment will increase 7% (as a % of total US population). Both the 18 and under and 25-44 year old segments will decrease. All other age segments are expected to remain relatively flat. The shift in demographics will allow retailers the opportunity to develop ethnic and generational store strategies.3 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 6 Retail differentiation is key to remaining competitive at retail. Utilizing technology to personalize the shopping experience is one method of creating shopping diversity. Retailers may also gain market share by transitioning to online selling in addition to their bricks-and-mortar store. A Closer Look at the Retail Landscape—Store Formats The grocery retail landscape continues to evolve. In the 1990s the biggest threat to supermarkets and grocery stores came from the supersized “one-stop shopping” retailers such as supercenters and warehouse clubs. Today, consumers are buying groceries across many retail formats including e-commerce. Companies, such as Walmart and Target, are focusing on the development of smaller store formats to remain competitive. Walmart has two smaller-format units, which include both the Walmart Express and Walmart Neighborhood Market banners. Both are making inroads against dollar stores, supermarkets and drug stores and are expected to play a key role in the company’s future. Walmart plans on opening 500 Neighborhood Market stores by fiscal 2016. However, Walmart considers Supercenters a growth vehicle from a sales perspective and will continue to build them when they see opportunity.4 Target launched a Target Express in Minneapolis in July. It is its smallest store yet at 20,000 square feet. It includes a larger selection of grab-and-go-foods along with a basic selection of home goods, portable electronics, health and beauty products and pharmaceuticals. Target will evaluate the new format to determine plans for future growth.4A Some in the industry expect to see retailers experimenting to secure their future financial success. More consolidation is expected at the regional and local levels as family-owned retailers become less interested in keeping the family business. More growth is expected in extreme value formats and dollar stores, with limited assortment stores growing from 2,500 today to between 5,000 and 7,000 over the next five years. E-commerce is projected to grow as is emphasis on fresh store formats.5 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 7 Fresh store formats are anticipated to grow as shoppers attempt to eat healthier meals by including more fresh produce in their diets. Fresh store formats offer center-store assortments that differ from traditional retailers by offering a larger selection of ethnic, natural and organic items in a smaller store format. In addition to the fresh store format, many other store formats are expected to grow, while others are expected to lose market share. The following stores are estimated to have increased dollar market share through 2017: • Fresh Format Stores (Whole Foods, Sprouts, The Fresh Market, Independents) will increase from 1.1% in 2012 to 2.1% in 2017 • Limited Assortment Stores (Aldi, Trader Joe’s and Save-A-Lot) will increase from 2.7% to 3.4% • Convenience Stores with Gas to increase from 12.7% to 13.8% • Supercenters (Super Target, Kroger Marketplace) to increase from 17.3% to 18.2% • Dollar Stores (Dollar Tree, Dollar General) to increase from 2.4% to 3.1% • Wholesale Club Stores (Costco, Sam’s Club) to increase from 8.7% to 9%6 Fig. 2. Source: Willard Bishop Consulting, 2013.7 It is estimated that traditional supermarkets will continue to lose market share as consumers choose other formats for their grocer needs. The estimated decreased dollar market share for the following retail environments through 2017 include: • Mass Merchandise Stores (Walmart, Kmart, Target) will decrease from 4.4% to 2.7% in 2017 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 8 • Convenience Stores without Gas will decrease from 2.2% to 2.1% • Traditional Supermarkets will decrease from 39.8% to 36.5%8 Overall grocery demand and capacity dynamics are expected to have intense competition in the years ahead. By 2025, it is expected that supercenters will reach saturation in all but the most urban markets; dollar stores will approach saturation with about 36,000 stores; and online grocers will command approximately 10% of the market; and the overall industry will have added nearly 290 million square feet. It is projected that non-supermarket channels will add 145 million square feet by 2025, which includes supercenters, neighborhood markets, dollar, club, drug and convenience stores.9 Online grocery shopping is on track to become a $9.5 billion industry by 2017. Online Grocery Shopping The increasing value of convenience among consumers is helping build online grocery sales. Online grocery shopping is estimated to become a $9.4 billion industry by 2017.10 There are a few established online retailers such as FreshDirect and Peapod serving regional areas. However, Amazon Fresh is fast becoming the influential online grocer due to their logistical capabilities and capacity. Amazon’s relationship with its customer base depends on its ability to deliver items quickly and efficiently. Amazon Fresh ran a five-year trial in Seattle. It expanded by offering same-day grocery delivery service to Los Angeles and San Francisco. Prime Fresh members pay $299 a year and receive same-day and earlymorning delivery on fresh grocery items and free two-day shipping on all other items Amazon offers.11 To build a technological lead over other online grocers, Amazon is testing the new Dash handheld wand that allows users to scan bar codes to have it added to the shopping list. Once the list is built, consumers log in to their Amazon account and schedule delivery. Currently, Dash is being tested where Amazon Fresh is offered. As expected, mobile devices will play an important role in online retailing.11A HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 9 As more retailers offer online services, a central challenge will be to establish credibility. Amazon Fresh has brand credibility due to Amazon’s reputable delivery program. However, some consumers are likely to weigh their options to determine if online grocery shopping is right for them. Brick-and-mortar stores tend to offer a more familiar, personal experience for many shoppers—a perk they may not be willing to trade. Typically, once the online retailer establishes credibility with the consumer, the barrier to purchase is alleviated. Online grocery retailing is expected to grow. Other Projected Trends Convenient, better-for-you food options, especially for breakfast and snacking, will be a focus in retail for 2015. That’s good news for produce because along with nutrition and healthful eating, vegetable and fruits are taking center stage on Convenient, plates. As consumers seek more information on the food better-for-you food they eat and purchase, technology will play a pivotal role especially when targeting specific consumer groups. options especially Food safety and sustainability are also important trends as retailers try to improve consumer confidence. for breakfast and snacking will be the Nutrition will play a central role in an effort to maintain optimal health. When eating out, consumers are focus of retail choosing vegetable dishes more often. Vegetable offerings on restaurant menus nationally have for 2015. increased 11 percent over the past three years.12 In fact, vegetables are becoming mainstream and are even dispensed through vending machines. As an example, Farmer’s Fridge™ started offering a unique vending concept in Chicago. The company uses organic ingredients from local farms to make salads, sides and snacks from scratch each morning. It packages them in recyclable plastic jars and delivers them to the vending machines. The unpurchased salads are removed each morning and donated to a local food pantry.13 Millennials (18- to 34-year-olds) and the IndieWoman (comprised of nearly 31 million 27-year-old and older, childless women living alone and spending a combined $50 billion on food and beverages each year) are looking for convenience and healthy ingredients. Millennials want to purchase ingredients for recipes found on Pinterest and have it delivered to their home. According to Price Grabber, 57 percent of Pinterest is made of food-related content HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 10 with one-third indicating they may have purchased food or cooking items after seeing it on the site. Additionally, the IndieWoman is looking for brands to offer semi-homemade meals that use fresh, high-quality ingredients because they do not have time to cook.14 SNACKING Snacking and breakfast eating occasions are expected to increase with improved food options. It is projected that more protein-rich and convenient breakfast choices will be on the rise as consumers opt to live a healthier lifestyle without compromising taste. Equally important will be the availability of nourishing snack alternatives. Supermarkets may offer alternative choices to high-sugar, high-fat snacks at the checkout with convenient, on-the-go replacements. Snacking is an $87 billion business in the United States, but it is the better-for-you snacking category that is growing. Retailers and restaurants are looking for new ways to meet the growing demand. For example, McDonald’s and 7-11 stores are both introducing improved food options to attract customers with snack-sized options.15 Consumers are increasing their snacking occasions. In a Technomic study, forty-eight percent (48%) of consumers reported that they snack at least twice a day, compared to 25 percent in 2012.16 As a result, consumers are more likely to graze through the day seeking snacks that provide fuel between traditional meals. Snacking is typically an impulse purchase with sixty-two percent (62%) reporting that most of the snacks they purchase are on impulse.17 According to a 2013 IRI report, one in five Americans now eats snacks throughout the day instead of eating three square meals or several mini-meals each day. These consumers are classified as opportunist eaters who grab food and drink throughout the day as the opportunity arises, without consideration as to whether they are eating a meal or snack.18 In fact, according to the Technomic study, more than 33 percent of consumers claim they will eat more nutritious snacks in the coming year.19 Teens and young Millennials are most inclined to eat snack foods. Fresh fruit is among the top five snack items among this group. Sweet and savory snacks are also popular.19A This group wants a greater variety of choices including snacks with exotic flavors. HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 11 The food industry is developing new products such as nuts with rosemary and black pepper, spicy potato chips and chocolate paired with sea salt or beef jerky. Retailers can capture a larger share of the “buy and consume” behavior by rotating the types of items stocked, such as avocados, near the entrance or check-out counter to align with the time of day. Additionally, the breakfast category is expected to expand because it is part of the better-foryou, on-the-go snacking eating occasion. BREAKFAST The breakfast market is a $65 billion industry and is projected to grow in value to $83 billion in the next eight years.20 Consumers consider breakfast to be the most important meal of the day. However, people often skip breakfast, with 56 percent of consumers included in an IFIC Food and Health Survey indicating that they do not eat breakfast every day.21 Several factors are impacting retail sales of breakfast items. Retailers are facing competition for sales from quick-service restaurants (QSR) such as Starbucks, Jack in the Box and McDonalds. Sales at QSRs were up 21 percent and accounted for 22 percent of the breakfast menu items. There have been increases in menu items at QSRs such as breakfast wraps, breakfast sandwiches, and French toast sticks.22 The breakfast market is projected to grow in value to $83 billion in the next eight Retailers may consider increasing their breakfast products because they account for eight percent of store sales, indicating there is substantial room to grow the category.23 With consumers’ increasing concern for nutrition combined with hectic schedules, retailers have an opportunity to appeal to consumers by offering more fresh options from the produce department. Retailers can add value by adding meal solution merchandising. Recipes that include Hass avocados can years. be an excellent choice for breakfast. By placing breakfast items together, it satisfies the shopper’s need for solutions, such as nutritious, homemade dishes and convenience, and it helps retailers differentiate themselves from the competition. Consumers are looking for grab-and-go items in the morning and products from the grocery store provide cost savings. Portable, nourishing breakfast items present a significant opportunity because of convenience for the time-starved, health-conscious consumer. HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 12 CONSUMER FACTS, FIGURES & TRENDS Organic Consumers no longer have to shop at specialty stores to find a variety of organic produce as most major retailers have adapted to meet the growing demand. Consumer sales of organic products, both for food and non-food products, accounted for $31.5 billion in sales in 2012, adding approximately $2.9 billion in new annual sales dollars, while also achieving double-digit growth for the first time since 2008.24 Sales of organic avocados reached $32 million for 2013, which is nearly a 25 percent increase over 2012 sales (source C). Produce continues to be the leading category of organic purchases, with 97 percent of organic buyers indicating they purchased organic fruits and vegetables in the past six months. Consumers of organic produce are typically loyal shoppers; tend to spend more per shopping trip; and shop more frequently than those who never purchased organic produce.25 According to a white paper published by Sullivan Higdon & Sink, even occasional organic produce shoppers agree that organic foods are beneficial. However, some consumers think the term organic is a marketing term. Forty-four percent (44%) of consumers indicated that they understand the meaning of organic, but many others admitted they did not know and do not understand the requirements needed to be labeled organic. However, half of all consumers believe organic is better for the environment; 45 percent believe organic is healthier.26 Nearly half of those who purchased organic foods do so because they believe it is healthier for them and their children. Thirty percent (30%) of parents say they buy organic because they want to avoid toxic and persistent pesticides and fertilizers; 29 percent want to avoid antibiotics and growth hormones; and 22 percent want to avoid genetically modified organisms.27 Moreover, over four in 10 parents (42%) said their trust in organic products has increased. The awareness of the USDA organic seal has grown, with more consumers more likely to look for the seal when shopping for organic products.28 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 13 Organic shoppers also look for local and natural claims. Organic, local and natural consumers are more likely to care about nutrition. Cost and convenience are less important to them. For some consumers, organic and natural are thought of as interchangeable.28A However, natural is not a regulated claim while use of the term “organic” is regulated. Organic labeling indicates the food has been produced through methods approved by the U.S. Department of Agriculture’s National Organic Program. Although natural products have had solid growth over the years, concerns have been raised as to whether highly processed foods can use this term. Locally Grown Locally grown continues to be a growing trend. According to Sullivan Higdon & Sink, consumers (79%) claim they want to buy more locally grown food. In fact, 53 percent of consumers state that they are willing to pay more for local food. Consumers typically associate local food with freshness and organic food with healthfulness. Consumers, in areas where locally grown produce is prominent, are generally willing to pay about an equal premium for organic and local food. However, locally grown produce is often less expensive than organic produce, tipping the scale in its favor and driving demand.29 The definition of local varies by consumer. Only about 17 percent of consumers claim they do not care where their food is grown. About 36 percent (36%) want their food to come from within the country in which they reside, and 38 percent want it to be from their state. Only nine percent (9%) expect their food to come from their hometown. As expected, consumers interested in organic, natural and local produce are more interested in where their food is grown. While consumers want food to be grown and produced closer to home, they also have realistic expectations of food production and logistics.30 Fig. 3. Source: Sullivan Higdon & Sink Market Research, 2013 31 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 14 Locally grown produce is more important to consumers that have access to produce grown in their geographic area. However even these consumers purchase imported produce in order to enjoy it all year long. In many regions of the country, consumers rely on imported fruits and vegetables all year long, due to the year-round availability. According to a UC Davis report, 49.4 percent of all fruit (excluding bananas) as a share of U.S. fresh consumption is imported.32 Food Safety Millions of Americans are affected by foodborne illnesses each year according to the Centers for Disease Control and Prevention (CDC). The CDC data indicates that 48 million people get sick, 128,000 are hospitalized and 3,000 die from foodborne diseases every year.33 To combat the rise in outbreaks of foodborne illnesses, food manufacturers, distributors and retailers are taking greater care in selecting business partners that are proactive with food safety. Some food companies are now requiring their suppliers and distributors to have certifications recognized by the Global Food Safety Initiative (GFSI). Other issues come into play regarding food safety including how consumers choose to handle their food at home. For example, California’s ban on plastic grocery bags and the implications associated with customers’ reuse of bags that are not sanitary pose challenges for retailers. Also, health officials recommend that consumers wash all produce before eating, but they may not follow such procedures. Educating the consumer through social media may help draw attention to these issues. As Millennials use their buying power, technology may be the best way to reach them. Some in the produce industry believe that a grading system (similar to the health standards in the restaurant industry) for produce suppliers and retailers could work well to reach this demographic. Retailers may need to take a more proactive stance to ensure consumers are getting the best and safest products. More emphasis is being placed on planning and designing food safety systems that reduce risk. Companies may benefit by identifying where a risk may exist and then focus their efforts on food safety and quality over regulations. As retailers plan for food safety programs, they may want to implement sustainability programs as well because it is becoming one of the fastest-growing segments. HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 15 Sustainability A product’s sustainability impacts shopping decisions including product and retailer choice. Consumers want help from retailers to purchase eco-friendly grocery products. Nearly half of adults claim they are more inclined to buy eco-friendly products, and four out of 10 say they would pay more for them. Still, the majority indicates that they buy whichever products suit their needs at the time, green or not.34 The green marketplace is one of the fastest-growing sectors in the U.S. economy,35 and some retailers are making an effort to reduce their carbon footprint. For example, Publix, which is known for its sustainability, including recycling, donations of unsalable items, and other initiatives to divert food waste from landfills, is in an alliance with other key retailers such as Wegman’s and Kroger to reduce food waste. Their collaboration is called the Food Waste Reduction Alliance (FWRA) and its goal is to reduce the amount of food going into landfills and to feed more of America’s hungry. Wegman’s is the founding member of FWRA and plans to increase the amount of waste it composts over the next six years.36 Other retailers are also making a concerted effort in the green initiative by taking action. In addition to 46% of consumers recycling, retailers are supporting green businesses indicated that green by featuring products from companies that use renewable power to manufacture products; opting product options not to sell bottled water; and offering products in bulk to reduce packaging. However, even though green can influence continues to be a hot topic, consumers indicated that unplanned purchases. retailers and manufactures do a relatively poor job of providing green information in the store. Retailers can benefit from using in-store materials to help communicate their green efforts because 46 percent of consumers indicate that green product options can influence unplanned purchases.37 Eighty-four percent (84%) of consumers say they consider sustainability when making purchase decisions.38 Overall, women tend to be more HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 16 eco-conscious (45 percent), and are willing to pay a premium for green products.39 Consumers tend to look for companies and brands “doing the right thing” and “being responsible.”40 Sustainability is increasingly important for both consumers and companies. Retailers will want to resonate with consumers and communicate their position on their green products and programs. Consumers are familiar with sustainable products yet some are unable to name specific sustainable companies or products. By closing this gap, consumers may purchase more of the sustainable products they claim they are interested in. Sustainability efforts tend to resonate more with Millennials. By 2015, Millennials will be the largest contributing group and influencer in food sales. Targeting Consumer Demographics Millennials Millennials have an estimated annual direct spending power of $200 billion. Their indirect spending each year is an estimated $500 billion. This group will make up the largest portion of the work force by 2015 and will be the largest contributing group and influencer in food sales. They are the first generation to grow up “digitally” and they prefer a two-way dialog with select products. They are heavily influenced by their peers and can be reached by leveraging digital capabilities. Millennials base their purchase decisions around quality, price, and what other people are saying about it. They do not shop alone, and one in three will not make a purchase if their friends disapprove.41 Mobile is becoming a critical part of the marketing mix when reaching this target. These Millennial shoppers use digital channels for grocery shopping, educating themselves about products, saving money, and making the task more fun. When they are shopping inside a grocery store, Millennials favor the produce and freshly prepared foods located on the perimeter of the store. Millennials seemingly spend as much time looking at their phones as they do at the products on the shelves. Sixty-one percent (61%) use their smartphones to compare prices of items; 57 percent find coupons; 54 percent access a shopping list; and 51 percent look for recipes.42 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 17 Millennials are early adopters, gravitate towards cause marketing and prefer promotions that are tailored to personal shopping patterns. They will continue shopping in multiple outlets, both online and in physical stores. The retailers and products that connect at the store level and online will have a better chance of reaching this savvy consumer group. If a retailer can offer savings through a loyalty card or mobile app, it has a better chance of making a sale. Hispanic Millennials are a subset of this group with tremendous influence and growth potential. Hispanic Shoppers The Hispanic spending power is strong and growing with more than 52 million Hispanics in the United States, their spending is expected to hit $1.5 trillion in two years.43 The largest growth potential is in younger Hispanics and second- and thirdgenerations who are becoming enculturated while retaining much of their heritage. When it comes to shopping, Hispanics tend to shop less often, but spend more per trip and are less likely to buy products at promotional prices. Spanish language-preferred consumers are less frequent shoppers in supercenters and convenience stores.44 Retailers could benefit by developing a connection to become the destination of choice due to fewer shopping trips and preference of small independent stores. Specialty stores, known as tienda, are important to Hispanic families because they carry fresh authentic products and serve as a place of emotional standing. These consumers prefer fresh products that allow them to replicate dishes from home. To appeal to the Hispanic market, retailers, such as Target and Walmart, are focusing on freshness and marketing the produce section. The strategy is working because they are generating more trips to the store. Other factors that gain shopper loyalty with this consumer group include: an abundance of fresh produce and groceries; friendly service; short distance to the store; reasonable prices; assortment; and a fun shopping experience.45 Retailers can benefit from leveraging digital shopping tactics to appeal to Hispanic Millennials. According to the Center for HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 18 Hispanic Hispanic Leadership, Millennials use mobile devices at nearly twice the rate of non-Hispanics.46 Hispanic consumers are more likely to own a smartphone (57%) vs. the general population (45%).47 Social media is also important to this market. Retailers can review online comments about their store or specific spending products and modify their messaging accordingly to appeal to this market. is expected to hit $1.5 trillion by 2016. The Hispanic consumer is important to retailers. By reaching out to the Hispanic shopper in creative ways to earn their trust, loyalty can be built with customer relationships and social media connections. Closing The Retail Report provides retail trend information covering the dynamic shifts in the produce industry—from changes in store formats, online shopping, mobile marketing to changes in eating patterns including snacking and breakfast eating occasions. This report calls attention to factors that may impact retail grocery and Hass avocado sales in the coming years. Industry executives and marketers can use the information compiled in this report to review industry changes and trends to help build Hass retail sales and remain competitive in our ever-changing industry. HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 19 APPENDIX Retail Produce Department Performance Avocados ranked #1 in percentage growth at +15.5% and #6 in total dollars, outpacing the total Fruit category dollar growth rate of +3.7% for the 13-weeks ending 2/23/2014 (for categories over $120MM-GROC). Fig. 4. Source: IR I/Freshlook Marketing, 13-weeks ending 2/23/14 Fig. 5. Source: IRI/Freshlook Marketing, 13-weeks ending 2/23/14 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 20 RETAIL TOP 20 The list of Supermarket News’ top 20 food retailers in the United States. The beneficiary of Supervalu’s decision to sell the retail stores was Albertsons, which was once counted out as a major player. Albertsons purchased 877 stores from Supervalu and another 50 United Supermarket stores in Texas.48 Albertsons also purchased Safeway for $9.2 billion dollars.49 Albertsons has returned to prominence moving up to number eight on the list.50 1. Walmart Stores 2. Kroger Stores 3. Costco Wholesale Corporation 4. Target Corporation 5. Safeway Stores 6. Publix Super Markets 7. Ahold USA 8. Albertsons Supermarket Company 9. C&S Wholesale Grocers 10.H-E-B Stores 11.Delhaize America 12.Dollar General Corporation 13.Supervalu Stores 14.Meijer Inc. 15.Wakefern Food Corporation 16.Whole Foods Market 17.BJ’s Wholesale Club 18.Trader Joe’s Company 19.Metro Inc. 20.Family Dollar Stores HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 21 WORKS CITED Horovitz, Bruce. (2013, November). Vegetables Shift to Center of the Plate. Retrieved November 11, 2013, from USA Today: http:// www.usatoday.com/story/money/business/2013/11/09/vegetablesculinary-treats-restaurant menus/3417879 1 USDA United States Department of Agriculture Economic Research Service. Food Price Outlook, 2013-14. Retrieved April 14, 2014 from USDA: http://www.ers.usda.gov/data-products/food-price-outlook/ summary-findings.aspx#.U0xOavldX_1 12 USDA Economic Research Service (2014). Changes in Food Price Indexes, 2010 through 2014. Retrieved April 14, 2014, from USDA: www.ers.usda.gov/data-products/food-price-outlook.aspx 13 2 Food Marketing Institute (2013). Tomorrow’s Trends Delivered Today Food Retailing 2013. Retrieved April 14, 2014, from https://www.fmi. org/docs/default-source/webinars/webinar-technology-deck-final. pdf?sfvrsn=2: (PDF 3 Wilson, Marianne. March 6, 2013. Walmart In Line to Open 500 Neighborhood Market Stores by Fiscal 2016. Retrieved April 29, 2014 from Chain Store Age: http://www.chainstoreage.com/article/ walmart-line-open-500-neighborhood-market-stores-fiscal-2016 4 Supermarket News. January 17, 2014. Target Plans 20K Square-Food ‘Express’ Store. Retrieved November 13, 2014, from Supermarket News: http://supermarketnews.com/retail-financial/ target-plans-20k-square-foot-express-store 4A Zwiebach, Elliot. January 29, 2014. Format Experimentation Likely. Retrieved April 29, 2014 from Supermarket News: http://supermarketnews.com/retail-amp-financial/formatexperimentation-likely-consultant-says 5 Watson, Elaine. June 21, 2013. The future of food retail: Dollar, natural, fresh, limited assortment and e-commerce? Retrieved November 3, 2014 from Food Navigator: http://www.foodnavigatorusa.com/Markets/The-future-of-food-retail-Dollar-natural-freshlimited-assortment-and-e-commerce 6 Food Navigator. (2013). 2012-2017 Predictions: Which Retail Channels will Gain and Lose Market Share? Retrieved April 14, 2014: http://www.foodnavigator-usa.com/Markets/The-future-of-foodretail-Dollar-natural-fresh-limited-assortment-and-e-commerce/ (page)/1 7 Watson, Elaine. June 21, 2013. The future of food retail: Dollar, natural, fresh, limited assortment and e-commerce? 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Retrieved December 5, 2013, from Culinary Trends: http://www. conagrafoodservice.com/pdfs/Trend_News_Breakfast.pdf 20 Philips, David. (August, 2013). Consumer Demand Driving Today’s Breakfast Trends. Retrieved December 5, 2013, from Food Processing: http://www.foodprocessing.com/articles/2013/productdevelopment-breakfast-trends/ 21 ConAgra Food Foodservice. (2013). Breakfast Explosion. Retrieved December 5, 2013, from Culinary Trends: http://www. conagrafoodservice.com/pdfs/Trend_News_Breakfast.pdf 22 Furore, Kathleen. (2013, July). Breakfast Trends. Retrieved December 5, 2013, from Progressive Grocer: http://www.baerousa. com/assets/progressive-grocer-2013-july__.pdf (Page 104) (PDF) (See Source 23) 23 HASS AVOCADO BOARD | 2014 – 2015 ANNUAL TRENDS REPORT 22 Dimartino, Christina. (2013, September). 2013 OTA Industry Survey Data Shows Fresh Organic Produce Continues to Lead Category. Retrieved November 14, 2013, from The Produce News: http://www. producenews.com/index.php/news-dep-menu/test-featured/111512013-ota-industry-survey-data-show-fresh-organic-producecontinues-to-lead-the-category 24 Grocery Headquarters. (2013, April). Eight in Ten U.S. Parents Report They Purchase Organic Products. Retrieved November 13, 2014, from Grocery Headquarters: http://www.groceryheadquarters. com/2013/04/eight-in-ten-u-s-parents-report-they-purchaseorganic-products 25 “A Fresh Look at Organic and Local,” Sullivan Higdon & Sink FoodThink, 2012 26 Grocery Headquarters. (2013, April). Eight in Ten U.S. Parents Report They Purchase Organic Products. Retrieved November 13, 2014, from Grocery Headquarters: http://www.groceryheadquarters. com/2013/04/eight-in-ten-u-s-parents-report-they-purchaseorganic-products 27 Grocery Headquarters. (2013, April). Eight in Ten U.S. Parents Report They Purchase Organic Products. Retrieved November 13, 2014, from Grocery Headquarters: http://www.groceryheadquarters. com/2013/04/eight-in-ten-u-s-parents-report-they-purchaseorganic-products Means, Tim. (2013, February). Tips for Boosting Sales of EcoFriendly Products. Retrieved November 25, 2013, from Progressive Grocer: http://www.progressivegrocer.com/inprint/article/id5517/ going-green/ 37 Wright, David. (2013, September). The Why Behind the GreenUnderstanding Consumer Motivations in Sustainable Purchases. Retrieved November 14, 2013, from Produce Business: http://www. producebusiness.com/media/ebooks/13sep.pdf 38 Means,Tim. (2013, February). Tips for Boosting Sales of Eco-Friendly Products. Retrieved November 25, 2013, from Progressive Grocer: http://www.progressivegrocer.com/inprint/article/id5517/goinggreen/ 39 Wright, David. (2013, September). The Why Behind the GreenUnderstanding Consumer Motivations in Sustainable Purchases. Retrieved November 14, 2013, from Produce Business: http://www. producebusiness.com/media/ebooks/13sep.pdf 40 Hoxie, Sarah. (October, 2013). Millennials. Retrieved November 7, 2013, from The Snack (vol. 4, PMA 2013): http://www.thesnack.net/ 41 28 “A Fresh Look at Organic and Local,” Sullivan Higdon & Sink FoodThink, 2012 28A “A Fresh Look at Organic and Local,” Sullivan Higdon & Sink FoodThink, 2012 29 “A Fresh Look at Organic and Local,” Sullivan Higdon & Sink FoodThink, 2012 30 “A Fresh Look at Organic and Local,” Sullivan Higdon & Sink FoodThink, 2012 30A “A Fresh Look at Organic and Local,” Sullivan Higdon & Sink FoodThink, 2012 31 Orsini, Patricia. (November 2012). Millennials in Aisle 2.0. Retrieved December 5, 2013 from eMarketer: http://www.iriworldwide.com/ portals/0/articlePdfs/eMarketer_Millennials_in_Aisle_20-Keeping_ Young_Supermarket_Shoppers_Engaged_With_Brands.pdf 42 Longo, Don. (2013, July). A 360 Degree View of the U.S. Hispanic Consumer. Retrieved December 5, 2013, from Hispanic Retail: http:// www.hispanicretail360.com/article-a_360%EF%BF%BD%EF%BF%BD_ view_of_the_u.s._hispanic_consumer-5993.html 43 Longo, Don. (2013, July). A 360 Degree View of the U.S. Hispanic Consumer. Retrieved December 5, 2013, from Hispanic Retail: http:// www.hispanicretail360.com/article-a_360%EF%BF%BD%EF%BF%BD_ view_of_the_u.s._hispanic_consumer-5993.html 44 Nava, Arturo. (2013, December). The Latinspired Retail Solution. Retreived October 8, 2014, from Marketalo: http://marketealo.com/ the-latinspired-retail-solution/ 45 Nava, Arturo. (2013, December). The Latinspired Retail Solution. Retreived October 8, 2014, from Marketalo: http://marketealo.com/ the-latinspired-retail-solution/ 46 Cook, Roberta Dr. (2014, June). From Weather to World Markets: Factors that Affect Food Cost in the Fresh Produce World. Retrieved September 29, 2014, from the Dept. of Agricultural and Resource Economics University of California Davis. (PowerPoint Presentation). (see Source D in Appendix) See attached PPT deck 32 Strailey, Jennifer. (July, 2013). On the Safe Side. Retrieved December 12, 2013, from Progressive Grocer: http://www.baerousa. com/assets/progressive-grocer-2013-july__.pdf 33 Means, Tim. (2013, February). Tips for Boosting Sales of EcoFriendly Products. Retrieved November 25, 2013, from Progressive Grocer: http://www.progressivegrocer.com/inprint/article/id5517/ going-green/ 34 Means, Tim. (2013, February). Tips for Boosting Sales of EcoFriendly Products. Retrieved November 25, 2013, from Progressive Grocer: http://www.progressivegrocer.com/inprint/article/id5517/ going-green/ 35 Hispanic Retailer (2013, September). Hispanic Facts. Retrieved December 3, 2013, from Hispanic Retail: http://www. hispanicretail360.com/article-your_411_on_latino_millennials.-6216. html 47 Vault. (2013). Albertson’s LLC. 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