June 25, 2015

Supermarkets Changing In Face Of Consumer Demand

supermarkets changingSupermarkets are struggling – that’s no big secret these days.  As mass food manufacturers are losing sales to smaller brands (see article from earlier this week), supermarkets – long the mainstay of mass manufactured products – are also losing share.  To stem this lose, supermarkets and ‘big box’ retailers (like CostCo and Target) are looking to implement new strategies that will bring consumers back through their doors.

One such change, that speaks well for small food entrepreneurs, is that more of these supermarkets are now looking to bring in more regional and specialty brands.  The Millennials – a highly coveted spending demographic – have shown that they are interested in and willing to pay for specialty foods.  So, to attract them, supermarkets are giving up shelf space that was traditionally held by big brands and making way for smaller brands.

Another change is the fact that consumers have spoken loudly about their desire for less-processed foods.  This demand is so strong it’s led to changes in the big box stores with the news earlier this month that CostCo now sells more organic products than Whole Foods.  This move towards organic products is now one of CostCo’s fastest growth categories.

Even Wal-Mart, McDonald’s, and Tyson’s Chicken are calling for a cleaner supply chain with meat raised free of antibiotics and more humane treatment of the animals.  In each of these cases, the reasoning is that consumers are asking for it and if they can’t find it in your store or products they will go elsewhere.

It’s worth noting that this is not simply a US issue, British supermarkets, for example, are also struggling with sales for the very same reason.   It’s definitely an interesting era in the food industry right now. For so long consumers have simply eaten what was spoon-fed to them via million dollar advertising campaigns and readily available on the shelf.  Now, it seems, consumers are making demands and with that comes increased opportunity for small food entrepreneurs.

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