FMI’s Deep Dive Into The Power of Produce:
Research On Consumer Behavior Before, During And After Purchase To Be Discussed At New York Produce Show
Jim Prevor’s Perishable Pundit, November 22, 2015
We receive virtually every study done related to the produce industry and produce retailing. Almost all studies that involve the consumer suffer from a tragic flaw: they are surveys of some sort, and so tell us what consumers WANT to say. But because these surveys have no hard data on purchasing, they can’t tell us the degree to which a consumer’s claim corresponds to actual behavior. Alternatively the studies are pure data and leave to speculation why consumers do what they actually do.
The Food Marketing Institute has made an enormous contribution to the industry by squaring that circle. They have combined direct consumer research with the data coming off register rings to address what consumers say and what consumers do. It is a powerful combination to which they add analytic capabilities.
The study is extremely impressive, and we have discussed it in our Research Perspectives/Comments & Analysis pages in the December issue of Pundit sister publication, PRODUCE BUSINESS. You can see the point/counterpoint piece below:
The Power Of Produce Part 1: Before They Shop
It’s What’s In Store That Counts
We were quite fortunate to be able to get the three people spearheading this study and analysis all to The New York Produce Show and Conference to present their findings. We asked Pundit Investigator and Special Projects Editor Mira Slott to see if she could get a sneak preview of this most important presentation:
Below, you will find Mira’s three-part Q&A for the micro session at The New York Produce Show on FMI’s consumer-centric study with Rick Stein of FMI, Anne-Marie Roerink of 210 Analytics and Sherry Frey of Nielsen Perishables Group.
Vice President, Fresh Foods
Food Marketing Institute
Q: Could you give us a snapshot of the micro session you will be conducting with Anne-Marie Roerink, Principal and Founder of 210 Analytics Company, and Sherry Frey, Senior Vice President of Nielsen Perishables Group at the New York Produce Show? What revelations can attendees glean from your consumer-centric study: The Power of Produce 2015, An In-Depth Look at Produce through the Shopper’s Eyes?
A: We think this is one of the first consumer studies focused on shopper perceptions not only from the time when they enter the produce department, but even before they arrive at the store.
Also, rather than bringing commissioned work to the FMI Fresh Executive Council (FEC), we came to the Council and asked, ‘What are you interested in finding out?’ Retailers and wholesale/grocers drove the questions —this is what they want to know specifically. Most times they just receive the information.
Q: Is that a salient point?
A: Yes. This is an important aspect. FMI facilitated the study using the Council’s intellectual capital. [Editor’s note: FEC includes executives from the following companies: Giant Eagle, Hy-Vee, Affiliated Foods Midwest Coop, Publix, Associated Wholesale Grocers, Harris Teeter, Brookshire Grocery, Longo Brothers Fruit Markets, Wakefern, Unified Grocers, Heinen’s Fine Foods, Delhaize America, Lunds/Byerly’s, Ahold USA, Lancaster Foods, Albertsons/Safeway, Meijer's, Giant Eagle, Bristol Farms/Lazy Acres, Burris Logistics, Schnucks, Price Chopper/Market 32, and Wegmans.
We think this report is unique because almost all research out there is focused on quantitative sales results, by segment, IRI and Nielsen data. This gives insight into how consumers are thinking, and is driven by practitioners in the retail and wholesale industry. That’s why it’s got so much life and interest.
Q: What did FEC members want to know?
A: First, how does the consumer figure out where they’ll shop? When our customers don’t shop with us, where are they going, and what channels are emerging? What trends are happening that we need to get on board with? And they are always interested in how millennials behave -- one in three Americans are millennials; what motivates them and how to keep them?
Every time a study is done for the first time, it triggers what questions are still out there, and we’ll start to address those. We’re doing this study year after year, and will use this as a benchmark with the same questions and add new questions.
Q: How will the micro session unfold?
A: Anne-Marie and I can talk about all the key topics. I’ll give you the top level, but Anne-Marie can go to the level below and provide the deeper insight. Sherry Frey will come at this from the statistical information side. Nielsen Perishables Group holds all that sales and industry data to compare and contrast with our results.
When we do the panel discussion at the New York Produce Show, the goal I’ll facilitate is to open with an introduction of why we did the research, what we tried to accomplish, and Anne-Marie will walk attendees through the content.
Q: OK, why don’t you start us off then with a preview of what attendees will learn, and then I can follow up with Anne-Marie and Sherry to round out this pre-show piece…
A: The big areas to holistically concentrate on are first, pre-trip planning. When it comes to produce, consumers make a list, at a very high level. They may not make a list for all grocery shopping, but with produce they make a list, and they use ads, mostly newspaper inserts in compiling it.
The research determined advertising clearly drives direction. If consumers need apples, they start looking at all the different ads to compare apples on sale. Of course, it could be the consumer is in a location with only one store, but if there are choices, the consumer is not loyal.
Q: That consumer will actually go to that particular store because of its promotion on apples?
A: It could be Fuji apples at $1.66 a pound, and the consumer will plan the trip based on the ad.
Q: What happens when they get to the store? Do they veer from the list?
A: Data showed a key insight: While consumers base the store choice on the pricing of the ad, once they walk in the store, it’s all about quality and appearance, and price goes out the window. If the display is not neat, and culled to eliminate the items with brown spots, they immediately change their mind.
This tells the industry how important it is for retailers to pay attention to merchandising. That shopper won’t necessarily buy the Fuji that was on ad, and chances are they may not even switch to a Jonagold or Red Delicious. They’ll measure you once they are inside and may change where they shop all together. The reverse of that… the good news is… if Fujis look great, they’ll buy a lot more than they were originally planning.
Most consumers will buy 50 percent more produce than what is on their list once in the store. Produce is huge for impulse buys.
A key takeaway is the condition of the store and the quality of product drive consumer behavior. Some of this is intuitive. Retailers have known this for years, but it’s nice to have data confirm how important it is in outlets to maintain high quality displays and products.
This covers one big bubble in our research, which we call planned purchase and impulse.
Q: What are some other big bubbles?
A: The next area I’ll talk about is mega trends in produce. ‘Local’ really resonates over all in trends. Consumers when given a choice of local or organic will buy local. And given price differentiations between regular, local, and organic strawberries, they’ll buy local.
Q: Did you find out what consumers think local and organic mean?
A: We learned the consumer often has the perception local is organic whether it is or isn’t. The number one reason consumers say they buy local is it is fresher, and number two is it supports the local economy.
And the last thing about local, the ‘aha’ moment, is the retailer can define the parameters for what constitutes local and the consumer will believe you, although there are some regionality issues.
The consumer walks in and sees the POS -- our local product is within a certain number of miles from the store, or our local product is grown out of these five states, or my local product is from the USA, and the consumer says OK and is generally fine with that. The only catch is when you’re operating in big growing areas, such as California and Texas, where consumers want retailers to confine the definition of local, and not include other states.
If you go to Boston, for instance, or an area with fewer local growing options, your definition of local can become much broader.
This knowledge helps retailers. They can widen the scope of what constitutes local. In addition, organic continues to grow.
The other mega trend seems to be farmers’ markets as a secondary channel. Consumers believe farmers’ markets have fresher product and are closer to growers. This is quite different from reality, but that’s the perception. Farmers’ markets could get rejects from supermarkets because product doesn’t meet their Quality Assurance.
When the consumer walks into a farmer’s market, it connotes a certain feel. You may have a few growers show up at a farmers’ market and the consumer believes all product is local.
The unexpected was how much local resonated over all the other segments. A significant number of consumers at some point has walked into a farmer’s market, which is a huge wakeup call for the retail industry. One takeaway was the more you can create an atmosphere that what you have is local, with POS or with displays, the more it will resonate with consumers. Mimicking the decor of a farmer’s market, and how some retailers are crafting that experience, is proving a winning strategy.
The other trend is snacking and juicing, especially popular among millennials and families with young children. Both are huge growth opportunities.
The last piece is value-added. Consumers are really interested in saving time. Wegmans, for instance, does a good job with in-store cut fruits and vegetables. A store could take bell peppers, mushrooms and onions, wrap them up and call it fajita mix and consumers love that. The value added really resonates. A Wegmans store was selling asparagus on the front stand at $1.99 a pound. Diagonally from that, store associates were cutting asparagus stalks for $5.99 pound, and that was selling three to one. Shoppers were willing to pay $4.00 more.
Q: You’re talking about a Wegmans customer, though. Wouldn’t it vary depending on the type of store and consumer demographic the store is catering to?
A: Interestingly enough, value-added resonated throughout varying demographics. The value-added segment is up 13 percent, where produce overall grew 4 percent.
From the FEC, we received input in breaking out more information on demographics and regional differences — a consumer in Florida versus one in California.
Q: Did you oblige?
A: Yes. We saw clear cut differences with age. At the micro session, we’re able to pull out distinctions with millennials and different generations. Millennials are really driving the growth and are very much willing to switch store loyalties. Our study shows millennials are very impulsive. If a produce employee encounters a millennial in the produce department, be aware they could lack knowledge and may need help on how to cook, so any way to engage them is desirable because they don’t have as much experience in that regard as older generations.
Q: Did you explore the impact of social media, cell phones with apps, etc.
A: Social media goes wide but not deep. Millennials know to ask questions, but don’t know how to prepare the items. In the next year, we’ll be doing more work on how the consumer is responding to social media.
The new parents are very interested in the whole health and wellness trend. They know fruits and vegetables are healthier, what vitamins are in broccoli, nutrient values in potatoes; they know the department is healthy but want nuances, anyway we can help educate.
Q: How important a role does fresh produce play in shopping decisions and where one shops?
A: Next to location, produce is the number one reason the consumer selects to shop in a particular store, paramount to other departments. That’s why produce is high on list-making. Perishability is only good for a certain amount of time, and that’s a reason why location is still number one.
This is where FMI in general sees retailers try to differentiate themselves; in produce, deli, the perimeters, and they create theater with the quality, freshness and layout.
Q: So if you win in produce, you’ll win overall.
A: It’s not rocket science to know how important high quality produce is in that respect. The research resonates here. If you don’t have that, you won’t get the sale, but more importantly, you’ll potentially lose your customer. It’s very meaningful to hear that’s what consumers are saying and the scientific research confirms.
Q: What consumers say and do are not always in sync…
A: I worked as a retailer for many years, and I can speak from experience: consumers often say and do two different things. But in this study, what consumers say is validated by the statistical data. For instance, consumers say they want value-added, and they’re walking the talk, which you’ll find when you talk with Anne-Marie and Sherry.
Just reporting what consumers are saying wouldn’t make the study useful; you must connect those comments to the reality of their actions.
Q: Key reasons to attend this seminar?
A: One aspect, suppliers often feel disconnected from consumers. They have all their relationships with the people who are going to sell their product. Any time the supplier can get closer to the consumer helps them drive their business.
We all know the consumer drives the business, and the business will only go where the consumer takes you. The minute you take your eye off the consumer, you go the wrong way. Stay consumer-centric, drive strategies and tactics by what the consumer wants and needs.
Mira then reached out to Anne-Marie Roerink to garner her perspective…
Principal and Founder
210 Analytics Company
Q: We greatly appreciate your additional insights to incorporate into the educational micro-session. What was the impetus for the study, and how did you approach it? What parameters did you consider and why?
A: For the past 10 years, FMI, together with the North American Meat Institute, has been conducting the ‘Power of Meat.’ This study is immensely popular among meat packers and food retailers alike — as the one-stop source for consumers' take on buying and consuming meat and poultry.
The study hadn't gone unnoticed by the produce counterparts, and FMI and I often received requests from produce managers if such a study was available for their field as well. This prompted the inaugural sister study to the Power of Meat — the Power of Produce — last year.
The set-up is very similar, in that we target consumers, ages 18 and up. We make sure they are either the primary shopper or share that responsibility equally with someone else and require a minimum level of involvement in the category — in this case, fresh fruit and vegetables. The sample is nationally representative and a reflection of the Census, with the exception of gender, which falls out naturally, based on shopping responsibilities, which typically means a 60/40 female/male split. It also covers similar areas, including pre-trip preparation, channel choice, the influence of marketing tactics, organic, rating the performance and more.
Q: Could you touch upon the team approach in conducting the study and the different players involved?
A: While the initial questionnaire design loosely followed the Power of Meat, we made sure to get retailer feedback at all stages of the study from questionnaire design to initial findings to the eventual report and presentation. We had a total of five retailers, ranging from national chains to small regionals, volunteer to work with us on the study. They provided questions and ideas on key takeaways for the report.
Q: What challenges do you face in doing a study of this nature, and how do you overcome those challenges?
A: The key challenge is always having more questions than space. So we have to be very strict in what topics we want to cover, what angles we want to cover and create schedules on topics that we need to trend every single year and ones that can rotate in and out on a year or multi-year basis.
Q: Could you talk about the methodology? Who participated in the study and why? Did you segment participants by demographics, geography, age, wealth, etc.?
A: The sample is a national representation and yes, for every question and every topic, we look at things like age, income, gender, area of the country, primary shopping channel, shopping spend, etc. So every topic provides national level statistics, but also indicates the deeper trends. For instance, with organics, we'll cover how the market is trending, but also cover who the organic buyer tends to be.
Q: Are you able to account for discrepancies between what consumers say and do; for instance, good intentions to buy/eat more produce compared to the reality, i.e., obesity epidemic, etc.?
A: Yes, we worked very closely with both IRI and the Nielsen Perishables Group. As such, the report includes a lot of "real life" study data that compares the point-of-sales data with what the consumers are saying. And surprisingly, in the case of meat and produce, consumer claims are very much in line with actual buying behaviors — unlike what we see in some other areas of the store. For instance, we have actual sales data on things like organic sales, new item incrementality, etc.
Q: It looks like you had an orchestrated structure for segmenting the report and its findings…
A: Each chapter contains a section at the beginning that includes the key highlights for the chapter. The chapter then covers the findings by demographic, if relevant differences were found. We also provided a Top 10 Findings with some of the things that jumped out to us.
Q: Could you elaborate on Rick’s comments regarding the role fresh produce plays in shopping decisions and where one shops?
A: Produce, along with meat, is the most researched item on people's list. People tend to use one of two systems. They either have a list of fruit and vegetables in mind they wish to purchase and search for matching promotions -- in which case, produce plays an enormous role in store/channel choice. Or, they look at the sales promotions and plan their meals/consumption around what is on sale.
Either way, produce has an enormous influence on the ultimate basket, particularly, as many people readily admit they often buy unplanned produce items when in the store. In other words, produce has both the benefit of a planned purchase and the added benefit of impulse sales.
Q: Did you have hypotheses going into the study? Did they unfold as expected?
A: We had assumptions based on the study committee's experience and industry knowledge and for the most part, these panned out. But it was extremely interesting to see how the interplay between promotions that get shoppers in the store, and the importance of in-store execution plays out in the mind of the consumer.
Q: From your perspective, what were the most enlightening parts of the study for produce industry executives? What advice could you impart to retailers and suppliers?
A: There are many key takeaways highlighted throughout the study, but one of the major red flags to me was the influence of the alternative channels on the produce purchase -- particularly because produce is such a key store- and basket-driver. For instance, many fresh executives believe that shoppers want to select produce (and meat) themselves, and as such don't think that online sales are a big competitor for their stores.
In reality, the online basket is as much about fresh as it is about stock-up. Likewise, few retailers worry about the impact of farmers' markets. And granted, their impact on the total store is probably pretty minimal. However, one in two supermarket shoppers visits a farmers' market with at least some regularity — often specifically to buy produce.
This means the retailer loses out on the produce dollar, but potentially the entire trip as shoppers may now pick another channel/store to purchase the rest of their basket. Shoppers believe farmers' market produce is fresher and like supporting local farmers. Understanding how to compete on similar levels, touting freshness as suppliers and retailers, along with food safety, are important ways to protect and grow sales.
Q: What areas of the study are you looking to explore deeper?
A: We have not yet started to explore topics for next year. But as I mentioned earlier, there will be some that we'll repeat every year to trend, while rotating in hot new topics. We're always open for suggestions!
Q: Why should New York Produce Show attendees make it a point to attend this session?
A: It's a great one-hour overview of the consumers' take of buying and consuming fruit and vegetables. Additionally, we have collected many pictures and examples from retailers across the country to drive home some of the findings and how to best respond to meeting and exceeding consumer expectations.
Mira then got in touch with Sherry Frey to further round out the piece…
Senior Vice President
Nielsen Perishables Group
Q: Thank you for teaming up with Rick Stein and Anne-Marie Roerink to share your research at the New York Produce Show and help the industry reach new plateaus. Could you describe your role in the research, and the reasons for your collaboration?
A: Thanks so much for reaching out to us. The Nielsen Perishables Group is playing a supporting role in the ‘Power of Produce’ research efforts of FMI and 210Analytics. We believe it’s important to support this type of research in the fresh industry, as the industry continues to better understand the changing consumer attitudes and perceptions.
Q: How is your information integrated into the research analysis?
A: The Nielsen Perishables Group data adds context to the consumer research survey, by showing what’s actually happening today in grocery stores, based on consumer attitudes. The data helps to validate the consumer attitudes and resulting impact on behavior, and also helps to identify where there may be a say/do gap in consumer attitudes versus actual behaviors.
Q: How do you go about collecting your data?
A: The supporting Nielsen Perishables Group data is built using retailer store data as well as consumer behavior data.
Q: What is your take on the challenges of doing a study like this?
A: I commend FMI and 210Analytics for tackling this type of study. The produce department is a critical part of the grocery store, but is in a rapid state of evolution. Challenges in doing this type of research are to create findings that are relevant to the diverse suppliers and retailers who now play in the produce industry.
Q: Both Rick and Anne-Marie note the potential conflicts that may arise with consumer perception studies. Rick points out several instances where consumer perceptions of local and organic, and of farmer’s markets, sometimes clash with realities. Anne-Marie explains the importance of verifying what consumers say with their actual behaviors. To that end, she said by working closely with both IRI and the Nielsen Perishable group, the report includes a lot of ‘real life’ study data that compares the point-of-sales data with what the consumers are saying. Could you follow up with Anne-Marie’s answer and provide additional thoughts?
A: It’s very powerful to pair the retail sales data with the consumer research results to validate the say/do behaviors and also to identify if there are areas of consumer interest not yet fully being met by the produce department.
Q: And what did you discover?
A: One of the most intriguing results, which also show in our sales data, is the emerging fragmentation of channels. As new retail outlets begin to carry more fresh produce, we find consumers are very comfortable splitting their ticket. This requires a new dynamic when thinking about how to win with consumers, and drives an increasing importance on quality as well as convenience (including convenience of retail location).
Q: What parts of the study are you looking to develop further?
A: In an initial year of research, it’s good to establish a baseline of understanding. There continues to be opportunities to explore the in-store (quality, price point) triggers for consumer decision-making versus the out-of-store decision. This will become even more of an interesting area as both suppliers and retailers leverage new digital tools to directly engage with shoppers.
Whether you are a retailer or foodservice operator with direct consumer contact, or a shipper or wholesaler, this is an important workshop.
We agree with Sherry Frey that the key finding is this idea that consumers are increasingly prepared to split their shopping trips. The old vision of a supermarket across the street from another supermarket vying for customer loyalty is just out of date. This has been ongoing for years — we wrote a piece in Pundit sister publication PRODUCE BUSINESS titled Death By A Thousand Cuts, 22 years ago about the phenomenon.
Yet what is becoming increasingly true is that it is not a matter of certain customers preferring supercenters, warehouse clubs, dollar stores, health-oriented concepts, convenience-oriented concepts or online services — it is the same customer at different moments in their lives.
Some of these are long term moments — parenting children in the home — and some are short term moments — a guy trying to impress a date he has promised to cook dinner for. Some are cyclical — the same person the day the paycheck comes in and the same shopper the day before the paycheck comes in.
In any case, this is a must-attend moment at The New York Produce Show and Conference, where a truly insightful study of relevance to all the industry will be presented and discussed with the top people involved.
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