Sue Wilkinson, Senior Director Information Service & Research, Food Marketing Institute

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2 For inquiries, please contact: Sue Wilkinson, Senior Director Information Service & Research, Food Marketing Institute T: Copyright 2017 Food Marketing Institute All rights reserved. This publication may not be reproduced, stored in any information or retrieval system or transmitted in whole or in part, in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the express written permission of the Food Marketing Institute. This report was made possible by a generous grant from the Food Marketing Institute Foundation. Established in 1996, the Food Marketing Institute Foundation seeks to ensure continued quality and efficiency in the food retailing system and is operated for charitable, educational and scientific purposes. To help support the role of food retailing, the FMI Foundation focuses on research and education in the areas of food safety, nutrition and health. Food Marketing Institute proudly advocates on behalf of the food retail industry. FMI s U.S. members operate nearly 40,000 retail food stores and 25,000 pharmacies, representing a combined annual sales volume of almost $770 billion. Through programs in public affairs, food safety, research, education and industry relations, FMI offers resources and provides valuable benefits to more than 1,225 food retail and wholesale member companies in the United States and around the world. FMI membership covers the spectrum of diverse venues where food is sold, including single owner grocery stores, large multi-store supermarket chains and mixed retail stores. For more information, visit and for more information regarding the FMI foundation, visit ABOUT THE HARTMAN GROUP: Since 1989, The Hartman Group, Inc. has been immersed in the study of American food and beverage culture, using ethnographic observation, quantitative tracking surveys and deep study of trends to understand the subtle complexities of consumer and shopper behaviors. Published by: Food Marketing Institute 2345 Crystal Drive, Suite 800 Arlington, VA U.S. GROCERY SHOPPER TRENDS 2017 PAGE 2

3 U. S. G R O C E R Y S H O P P E R TRENDS 2017 U.S. Grocery Shopper Trends Published by: Food Marketing Institute Prepared by: The Hartman Group, Inc. U.S. GROCERY SHOPPER TRENDS 2017 PAGE 3

4 Table of Contents Executive Summary Introduction Methodology Food shopping at a glance Chapter 1: State of the Marketplace Shopping diversifies, and Millennials gain e-commerce comfort A slight increase in spending outpaces inflation, while trips remain steady Co-shopping is the new normal for American households Shopper loyalty continues to fragment across multiple channels Shopper traffic continues to spread to less traditional channels Stores can differentiate themselves through distinction in the fresh perimeter, including high-quality private brands Online-only channel emerges from nascency driven by Millennials While online-only shopper base widens, categories purchased remains narrow Digital tools are more integral in shopping for households with kids Chapter 2: Transparency Transparency is the currency of trust in the digital age.. 19 "Transparency" invokes an ideal of truth in a culture of commercial skepticism Transparency embodies both a rational need for information and an emotional desire for authentic connection Retailer efforts to inform, reveal and connect build shopper trust and loyalty Promoting and supporting shoppers' ability to make intentional decisions is the foundation of transparency Millennial shoppers especially want to support companies that share their values and prioritize a broader good Beyond basic assurances of food safety, transparency connects most intimately to health & wellness Retailers have opportunities to guide and inform shoppers as they turn to fresh categories in their healthy-eating aspirations Retailers have opportunities to help shoppers navigate center-store categories Moderate interest in QR codes and the like indicates high potential for teachability.. 28 The industry will need to ensure that scan-able labels are relevant and easy to use Across cohorts willing to scan a label, ingredient and product sourcing, production and animal welfare are top concerns Shoppers need more information than labels provide about product attributes beyond undisputed ingredients and nutrients Food shoppers think food retailers do a better job at exposing and controlling what's within products than engaging them beyond products Transparency helps transform a retailer from "just a store" to an ally Retailers can think of transparency as a strategy for ensuring future relevance in a fiercely competitive landscape U.S. GROCERY SHOPPER TRENDS 2017 PAGE 4

5 Chapter 3: Shopper Trends and Values Connecting with today's shopper means becoming fluent in food culture Competence in food culture is key to credibly demonstrating understanding of shopper trends and values Consumers are increasingly reliant on government institutions to help ensure food is safe.. 37 What's in a label? Shoppers rely on dates marked on packaging to gauge whether food is safe.. 38 Shoppers are much more concerned about mishandling or malice than about eating foods past expiration dates When recalls happen, two-thirds respond by checking their food supplies at home Shoppers prioritize the perimeter as the fresh, less processed" trend continues Shoppers tend to want more information about ethical practices and minimal processing.. 42 Shoppers remain wary of GMOs - 4 in 10 try to avoid them altogether Local helps fulfil consumer desire to know what is in the food they eat At home, shoppers look for efficiencies in their own household supply chain Consumers continue to see their primary store as an ally in their wellness When eating healthy is a priority, consumers agree that food prepared at home helps them stay on track Family meals are undeniably important, but hindered by the reality of diverse schedules more than by diverse tastes Meal solutions serve as a patch between schedule constraints and family meals Appendix: Data Tables Methodology U.S. GROCERY SHOPPER TRENDS 2017 PAGE 5

6 List of Tables Table A.1: Shopper Demographic Profile Table A.2: Shopper Demographic Profile Table A.3-A: Shopper Segmentation Table A.3-B: Shopper Segmentation Table A.4: Household Segmentation Table A.5: Trended Weekly Household Grocery Expenses Table A.6: Frequency Of Visits To Grocery Store Table A.7: Frequency Of Outlets Shopped For Groceries, Trended Table A.8: Formats Shopped In The Past 30 Days, Trended Table A.9: Primary Stores Table A.10: Frequency Of Visits To Primary Store Table A.11: Shopping At Primary Store By Gender And Age Cohort Table A.12: Shopping At Primary Store By Income And Primary Channel Table A.13: Most Important Attributes When Selecting Primary Store, By Gender And Age Cohort Table A.14: Most Important Attributes When Selecting Primary Store, By Income And Primary Channel.. 64 Table A.15: Trended Average Store Ratings And Levels Of Recommendation Table A.15-A: Average Rating And Level Of Recommendation For Stores Shopped Table A.16: Online Category Purchase Preferences Table A.17: Online Grocery Shopping Frequency. 68 Table A.18: Online Category Purchase Preferences By Gender And Age Cohort 69 Table A.19: Online Category Purchase Preferences By Income And Primary Channel Table A.20: How Consumers Engage With Retailers Table A.21: Smartphone Use At Grocery Store.. 72 Table A.22: Grocery Shopping Responsibility.. 73 Table A.23: Reasons For Sharing Shopping Responsibilities Table A.24: Who Is A List Maker And List Making Behaviors Table A.25: Creating A Grocery List Table A.26: Shopping Planning Table A.27: Trended In-Store Money Saving Measures. 78 Table A.28: Purchase Behavior By Gender And Age Cohort.. 79 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 6

7 List of Tables Table A.29: Purchase Behavior By Income And Primary Channel Table A.30: Spending Behavior Changes.. 81 Table A.31: Spending Strategy Changes 82 Table A.32: Private Brand Purchase Behavior.. 83 Table A.33: Trended Package Health Claims Shoppers Look For.. 84 Table A.34: Package Health Claims Shoppers Look For, By Gender And Age Cohort. 85 Table A.35: Package Health Claims Shoppers Look For, By Income And Primary Store Table A.36: Product Claims Shoppers Would Like To Know More Information About, Among Those Who Are Seeking Product Claim Table A.37: Use Of And Attitudes On Store s Nutritional Labels Table A.38: Trended Nutritional Labeling Table A.39: Concern About Nutritional Content Of Food.. 89 Table A.40: Reasons Nutritional Content Of Food Is A Concern Table A.41: Reasons Nutritional Content Of Food Is Not A Concern Table A.42: Trended Evaluation Of Food Consumption At Home Table A.43: Healthfulness Of Food Prepared At Home Vs. Away From Home Table A.44: Responsibility For Providing Nutritious Food Table A.45: Who Helps You Stay Healthy Table A.46: Who Makes It Difficult To Stay Healthy.. 96 Table A.47: Parties Relied On Most By Shoppers To Ensure Safety Of Food Purchased Is Safe.. 97 Table A.48: Trust In Grocery Store To Ensure Food Safety 98 Table A.49: Trended Confidence In Food Safety At The Grocery Store.. 99 Table A.50: Trended Confidence In Food Safety At Restaurants. 100 Table A.51: Food Safety Problems Table A.52: Trended Food Related Health Risks Table A.53: Product Expiration Labeling Table A.54: Consumer Food Safety Behavior At Home Table A.55: Consumer Response To Food Recalls Table A.56: Sustainable Behaviors Table A.57: Attitudes On GMOs Table A.58: Perceptions Of Locally Grown, By Gender And Age Cohort U.S. GROCERY SHOPPER TRENDS 2017 PAGE 7

8 List of Tables Table A.59: Perceptions Of Locally Grown, By Income And Primary Channel Table A.60: Scanning A QR Code Or Label To Find Out More Product Information, By Gender And Age Cohort Table A.61: Scanning A QR Code Or Label To Find Out More Product Information, By Income And Primary Channel Table A.62: Shopper Behavior Regarding Product Choice And Company Practices Table A.63: Trust Earning Behaviors By Food Stores Table A.64: Trust Earning Behaviors By Food Manufacturers Table A.65: Store Behaviors And Practices That Attract Shoppers Table A.66: Store Behaviors And Practices That Attract Shoppers, By Gender And Age Cohort. 115 Table A.67: Store Behaviors And Practices That Attract Shoppers, By Income And Primary Store 116 Table A.68-A: Store Ratings On Dimensions Of Transparency Table A.68-B: Store Ratings On Dimensions Of Transparency (Cont.) Table A.69: Frequency Of Family Meals Table A.70: Importance Of Family Meals At Home And Common Obstacles, By Gender And Age Cohort. 120 Table A.71: Importance Of Family Meals At Home And Common Obstacles, By Income And Household Composition Table A.72: Meal Preparation Assistance Table A.73: Purchase Frequency Of 'Heat And Eat' Prepared Items From The Grocery Store 123 Table A.74: Purchase Frequency Of 'Ready To Eat' Prepared Items From The Grocery Store Table A.75: Frequency Of Purchasing Prepared Foods From A Grocery Store Instead Of Food Service. 125 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 8

9 Executive Summary Introduction For more than four decades, FMI has been tracking the trends of grocery shoppers in the U.S., taking note of where they shop, how they shop and what issues are most important to them as food shoppers. In an age when information moves fast, access is easy and feedback is continuous, consumer expectations of manufacturer and retailer openness are growing. Consumers want closer connections to their food. At a time when many cite an oversized and out-of-balance food system as an underlying cause of social and environmental ills, the desire for closer connection to food isn t just about resizing the food system to human scale it s about safety, health and ethics. This year, FMI has engaged food shoppers in conversations about these objectives under the rubric of transparency. Industry talk of transparency has referenced a disparate amalgam of priorities, perspectives and approaches, sometimes tied only loosely to consumer needs. What do shoppers expect from a transparent food retailer, and how can stores best address these expectations to enhance their relationships with shoppers? U.S. GROCERY SHOPPER TRENDS 2017 PAGE 9

10 Channel fragmentation continues, e-commerce gains exposure Non-traditional channels continue to erode the ongoing dominance of the supermarket as the shopper's primary store. In the mix of less frequented food sources, e-commerce has passed a tipping point during the past year, with large numbers of Millennials suddenly more comfortable with shopping online, albeit still confined to a limited breadth of food products. Households consistently share grocery shopping responsibilities, and men continue to play a larger role Co-shopping is the new norm: the vast majority of adults shop for food and groceries, and aside from those who live alone, shoppers tend to divide responsibilities. Responsibility for shopping remains gendered, but nowadays more than ever, American men are assigned, accept and are credited with a primary shopping role formerly the distinctive province of women. Transparency means context beyond the package Retailers who inform, reveal and connect with shoppers in support of safety, health and wellness, eating inspiration and ethnics are well positioned to build trust and loyalty. Compared to undisputed facts about nutrition within products, shoppers seek more help from retailers about the story behind the food and how it s produced. Millennials are most eager among shoppers to access additional product information using digital tools. Food retailers are increasingly well positioned for shopper wellness As shoppers seek fresh, less processed claims and categories, they rely on food stores as among their most trusted allies for meeting their wellness needs. Grocery s breadth of health-positioned packaged goods are complemented by the convenience of fresh prepared food options which are perceived as healthier than restaurant fare. Family meals are hindered more by the diverse schedules of family members than by diverse food needs Best-by/Use-by terminology is consistent with shopper perceptions of quality and safety Methodology Summary The following report draws on past FMI shopper trends annual surveys while highlighting new insights through a combination of qualitative research fielded in the last quarter of 2016 and quantitative research conducted in the first quarter of New survey data was collected in the U.S. from a total of 2,145 regular shoppers of groceries, 18 years and older. For deeper context, a mix of virtual, in-home and in-store interviews and ethnographies captured insights in person from a total of 14 consumers from multi-shopper and single-person households. Inperson interviews were conducted in the greater Atlanta area, and virtual interviews were fielded across the nation. Additional analysis was conducted with U.S. Census and USDA data sets on consumer spending, health and eating, and Hartman Group research into eating and shopping. U.S. GROCERY SHOPPER TRENDS 2017 PAGE 10

11 Food shopping at a glance ALL DATA FROM FMI U.S. GROCERY SHOPPER TRENDS, FIGURE E.1: SPENDING Rise in weekly spending overall, share of spending at primary store decreases slightly. Dollars per household $120 $100 $80 $60 $40 $20 $ Average weekly grocery spending $93.20 $97.80 $98.40 $99.90 $97.30 $ $ $ $ $ $ Primary store weekly spending 76% 78% 77% 75% 77% 76% 76% 75% 74% 78% 74% 100% 80% 60% 40% 20% 0% Average total trips per week Average trips to primary store Avg. trips for shared shopper FIGURE E.2: TRIPS Trips per week per shopper remain stable. Shopper trips per week FIGURE E.3: CONFIDENCE Notable increase in satisfaction with primary store (on 1-10 scale, where 10 is Excellent ), slight rise in confidence of food safety at grocery Rating of primary grocery store Confident that food in store is safe 66% 81% 83% 86% 88% 89% 83% 83% 84% 86% 87% FIGURE E.4: STORE CHOICE In 2017, channel fragmentation continues with further decline of traditional supermarkets as a primary store. While less traditional retailers enjoy more grocery traffic and shopper loyalty, 8% of shoppers still claim to have no primary store. Percentage of shoppers 80% 70% 60% 50% 40% 30% 20% 10% 0% * * * * * * * * Supermarket Supercenter Club store Discount Limited Assortment U.S. GROCERY SHOPPER TRENDS 2017 PAGE 11 Organic/ Specialty No primary store % 24% 7% 3% 3% 3% * % 25% 6% 3% 4% 3% * % 27% 7% 5% 3% 2% * % 27% 6% 2% 7% 2% * % 28% 5% 2% 5% 2% 2% % 28% 6% 3% 5% 3% 2% % 29% 6% 4% 5% 3% 3% % 22% 5% 3% 4% 2% 9% % 23% 6% 2% 4% 3% 9% % 25% 5% 2% 7% 3% 7% % 24% 5% 3% 5% 2% 8% Note: Other channels (which include Convenience, Dollar, Drug, Ethnic, Military and Online-only channels) selected as primary store not listed above account for 1% of shoppers in 2015, 2% in 2016 and 5% in *Data not collected in previous years.

12 1 State of the Marketplace Shopping diversifies, and Millennials gain e-commerce comfort For several years FMI has witnessed the signs and drivers of the fragmentation of shopper loyalty across channels. We recently came to recognize as well a fragmentation of shopping among shoppers in the home. While these shifts in shopper behavior may emerge slowly, over time we can clearly see an ongoing migration away from the very notions of primary shoppers and primary stores. This year, however, the bigger news is how comfortable Millennials have suddenly become with using online shopping for their grocery needs. U.S. GROCERY SHOPPER TRENDS 2017 PAGE 12

13 A slight increase in spending outpaces inflation, while trips remain steady FMI's annual shopper survey detects growth in household food and grocery spending similar to that seen by the U.S. government. This past year, the weekly spending on groceries reported by shoppers again ticked slightly upwards to $110 per week, an all-time high (see Chart 1.1). CHART 1.1: HOUSEHOLD WEEKLY SPENDING FOR GROCERIES $[VALUE] $[VALUE] $[VALUE] $[VALUE] $[VALUE] $[VALUE] $[VALUE] $[VALUE] $[VALUE] $[VALUE] $86 $87 $93 $94 $90 $95 $97 $98 $98 $100 $[VALUE] Grocery spending per week Weekly spending on "grocery-type" items (FMI estimate) Weekly spending on key grocery categories (U.S. Bureau of Labor Statistics estimate) Source: FMI U.S. Grocery Shopper Trends, n=2,145. (See Appendix Table A.5) U.S. Bureau of Labor Statistics, CEX, calculations by The Hartman Group. Estimates labeled to reflect year of publication, based on data collected at beginning of year or during prior year. Consumer Price Indexes for food retail and food service: USDA ERS Food Price Outlook, February Over the past ten years, household spending growth has aligned with food price inflation; households have spent more on average because food costs more each year on average (with a 2.6% average annual rise in food prices). In other words, after accounting for inflation and population growth, food retail spending has held steady over the long term. However, in 2016, retail food prices actually declined (by around 1.3%) according to government estimates, the first annual decline since With shopper spending continuing to rise in current dollars, the average household thus apparently bought more food for their money at retail. Americans likely ate more food at/from home and less food from restaurants, perhaps because restaurant prices actually continued to rise (by 2.6%). It remains to be seen whether these divergent pricing trends will continue and whether food consumption at home will make further gains or even hold its own against the long-term growth of restaurant eating. CHART 1.2: SHOPPER WEEKLY TRIPS FOR GROCERIES Grocery trips per week per shopper Source: FMI U.S. Grocery Shopper Trends, n=2,145. (See Appendix Table A.6) Shoppers make these food purchases predominantly in person, through trips to store locations. Over time, individual shoppers have recalled fewer and fewer trips per week on average, perhaps due to their increasing tendency to divide household shopping duties among adults in the home (see next page). In any case, the resulting number of trips recalled by individual shoppers in 2017 remained consistent with the average seen since 2014 (see Chart 1.2). Just as important for food retailers is how shoppers allocate shopping responsibilities across people in their households and split their purchases across stores and channels. U.S. GROCERY SHOPPER TRENDS 2017 PAGE 13

14 Co-shopping is the new normal for American households 84 % of all U.S. adults say they have at least 50% of the household responsibility for grocery shopping (compared to 85% in 2016) Explored more deeply last year, FMI continues to monitor the dynamics of shopping within U.S. households. Co-shopping is the new normal for multi-person households. Virtually everyone shops for food now. The vast majority of adults (84%) report carrying significant responsibility for their household s grocery shopping. For one-fourth of U.S. households (24%), shoppers live alone and therefore do all the shopping by default, but almost as many (22%) report equal sharing of duties between partners (see Chart 1.3). When couples do assign greater responsibility or ownership to one adult, a female still tends to hold the primary role, but even this appears to be changing. Among families practicing co-shopping, men increasingly assign to themselves a primary shopping role, and female shoppers increasingly accept or recognize this. CHART 1.3: WORLD OF SHOPPERS Single-person Households Multi-person Households CO-SHOPPERS varying degrees of sharing the labor 24% 45% 22% 9% SELF SHOPPER ALL shopping PRIMARY SHOPPER SECONDARY SHOPPER SHARED SHOPPER Majority of shopping Minority of shopping Equal shopping 45% 55% 39% 61% 66% 34% 48% 52% Source: FMI U.S. Grocery Shopper Trends, Shoppers n=2,145. (See Appendix: Tables A.3A & 3B) He does more of the shopping now. It used to be that he did most of the cooking when I did the shopping, but now our roles have kind of flipped now that we re eating healthier. Tanya, 45 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 14

15 Shopper loyalty continues to fragment across multiple channels As recently as 2005, a supermarket was named as the shopper s primary store by two-thirds of shoppers. For several years thereafter, FMI stakeholders watched warily as the supermarket s dominance on this measure subsided. Supercenters grabbed share of primary-store status at first but then seemed to lose momentum. However, instead of returning their loyalty to supermarkets, shoppers then began to question the very notion of a primary store, with almost 10% unable to assign this designation to one of the stores in their rotation. Today, even as the dust remains unsettled, primary-store status is assigned to supermarkets less than half the time, down to 47% (see Chart 1.4). CHART 1.4: CHANNEL OF PRIMARY STORE 67% 56% 52% 49% 47% 27% 25% 22% 23% 24% 7% 6% 6% 7% 9% 5% 5% 2% 2% 2% 1% 4% 7% 2% 1% 2% 3% 3% 7% 3% 5% 2% <1 % <1 % <1 % 2% 5% 8% * * Supermarket Supercenter Warehouse Discount Limited Assortment Organic/ specialty Other channels No Primary Store Source: FMI U.S. Grocery Shopper Trends, Q: Which store or service do you consider your PRIMARY source of grocery-type items? In other words, where do you spend the most money on grocery-type items for use in your home? 2016: n=2,145. Other channels include Convenience, Dollar, Drug, Ethnic, Military and Online-only channels. * No primary store not measured prior to (See Appendix: Table A.9) Shopper traffic continues spread to less traditional channels While primary-store status is harder to obtain for the most frequently visited grocery channels, less conventional channels have extended their presence in the average shopper s routines. While they rarely become primary stores, limited assortment, natural, convenience, ethnic and online-only food stores are increasingly frequented by shoppers (see Table 1.1). For retailers across all channels, this means that many of the visits they see will come from shoppers whose loyalties lay elsewhere, if anywhere at all; and conversely, this means that loyalty from their most frequent shoppers matters less and less, as shoppers split their baskets across channels and stores. TABLE 1.1: CHANNEL SHOPPING FREQUENCY Fairly Often/Almost Always visit Regular full-service supermarket 85% 83% Supercenter 54% 53% Conventional discount store 38% 36% Warehouse club store 29% 31% Limited assortment 21% 25% Dollar store 20% 22% Drug store 18% 18% Natural + Organic store 13% 17% Convenience store 8% 11% Ethnic food store 7% 11% Online-only food store 5% 11% Source: FMI U.S. Grocery Shopper Trends, Q: When you need grocery-type items, how often do you shop in-person or online at each of the following? (Top-2 box: fairly often/almost always visit). n=2,145. Results shown in red indicate year over year increase significant at p>.05 level. (See Appendix: Table A.7) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 15

16 Stores can differentiate themselves through distinction in the fresh perimeter, including high-quality private brands Produce, meat and other fresh categories not only maintain shopper engagement with offline, in-store channels, they also go a long way towards differentiating stores within these channels. Shoppers most often cite high-quality fruits and vegetables and high-quality meat among the attributes considered important when selecting a primary store, (see Chart 1.5). CHART 1.5: MOST IMPORTANT ATTRIBUTES WHEN SELECTING A PRIMARY STORE High-quality fruits and vegetables High-quality meat Low prices Accurate information displayed at shelf Great product selection and variety Clean, neat store Items on sale or money-saving specials Courteous, friendly employees Security of purchase history and other info Convenient location from home Store/site layout that makes it easy to shop Fast checkout 80% 75% 74% 74% 73% 72% 70% 59% 59% 58% 57% 53% Source: FMI U.S. Grocery Shopper Trends, Q: Please indicate how important each of the following is to you when you select a primary grocery store/source. (Top-2 Box: somewhat/very important). Top 12 displayed out of 28 items. Shoppers n=1,061. (See Appendix: Tables A.13 & 14) TABLE 1.2: TOP 5 CATEGORIES SHOPPERS REGULARLY PURCHASE STORE BRANDS Top Categories for Store Brands 64% Fresh produce 64% Milk, or non-dairy substitutes 63% Fresh bakery items 59% Fresh meats and seafood 58% Refrigerated dairy foods Three-fourths of shoppers say they choose private label or store brands at least some of the time they shop, and almost half do so on a regular basis (see Table 1.2). When it comes to private brands, fresh perimeter categories are the most widely used. These categories tend to represent the signature experience of each store. Source: FMI U.S. Grocery Shopper Trends, Q: Thinking about private label or store brands at your grocery store, how often do you purchase private label/store brand...? (Top-2 Box: fairly often/almost every time). Results are percentage of shoppers who purchase private brand versions when shopping category. n= varies ( ). (See Appendix: Table A.32) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 16

17 Online-only channel emerges from nascency driven by Millennials Among less conventional grocery channels, the most dramatic growth in shopper engagement was seen for online-only stores, now used frequently by 10% of shoppers, up from 7% in 2016, and at least occasionally by 25% (see Chart 1.6). More importantly, in 2017, nearly half (43%) of Millennials say they shop online for groceries at least occasionally (up by 50% relative to 2016), with much of this growth coming among those who say they shop online for groceries either fairly often or all the time. This is as large of a year-to-year change as FMI is ever likely to see in an annual tracking study, and it comes after decades of experimentation and evolution of the online channel s positioning and experience. Millennials appear finally to have moved from curiosity to comfort with this channel. CHART 1.6: ONLINE-ONLY STORE CHANNEL SHOPPING FREQUENCY 43% 25% 24% 28% 24% 20% 22% 16% 17% 12% 16% Occasionally Fairly often Almost every time 12% 9% 5% 10% Total Millennials (18-38) Gen X (39-52) Boomers (53-71) Mature (72+) Source: FMI U.S. Grocery Shopper Trends, Q: When you shop for grocery-type items, how often do you shop in person or online at each of the following? (Online-only stores.) 2017: n=2, : n=2, : n=2,265. (See Appendix: Table A.7) While online-only shopper base widens, categories purchased remains narrow Food retailers may not immediately notice any bottomline impacts of this dramatic underlying expansion of online s grocery reach. Among the products shoppers say they have ordered online during the past year, Millennials continue to select a narrow range of products to purchase online. They may go online for their cleaning products, pet food, baby food and some salty snacks and sweets, but in-person visits still tend to be required for much of the rest of the store, especially the fresh perimeter categories. It is not only produce that maintains reliance on in-person visits but also fresh meats, bakery and even refrigerated dairy foods (see Figure 1.1). This fits the picture of the online revolution starting from center store and working its way out. This is no longer something to just keep an eye on. It s happening, and it s habituating very large numbers of people very quickly to online-only providers and to the online channel for groceries. FIGURE 1.1: GROCERY CATEGORIES PURCHASED BY MILLENNIALS LESS/MORE WHEN ONLINE LESS LIKELY TO BUY ONLINE Non-prescription drugs Fresh bakery items Fresh meats and seafood Refrigerated dairy foods Fresh produce MORE LIKELY TO BUY ONLINE Baby food Pet food or treats HH cleaning products Salty snacks Sweets Purchased online by <30% of category buyers who shop online Purchased online by 50%+ of category buyers who shop online Source: FMI U.S. Grocery Shopper Trends, Q: Which, if any, of these types of grocery items have you ORDERED ONLINE during the PAST 12 MONTHS? Millennial n=216. (See Appendix: Tables A.18 & 19) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 17

18 Digital tools are more integral in shopping for households with kids Digital technologies may shift shopping into new channels, but meanwhile digital innovation also evolves the food shopping experience in person, before or during trips to stores. This year, FMI looked more closely at the influence of kids in the household on digital shopping behaviors. Digital engagement is driven by access. Among adults with access to the Internet, those with kids in the household are more likely to use a smartphone (93%, versus 76% for those without children). And among smartphone users, shoppers with kids at home are using digital tools far more often than those without kids (see Table 1.3). Generation matters for the choice of tools: Millennials favor more social tools, while Gen-Xers are more likely to use direct/utilitarian tools, such as digital coupons (see Chart 1.7). TABLE 1.3: DIGITAL SHOPPING BEHAVIORS BY HOUSEHOLD TYPE Behaviors that shoppers occasionally/frequently do now Total Households WITHOUT kids* Households WITH kids* Currently uses a smartphone to: 81% 76% 93% Use digital coupons 52% 46% 68% Check weekly sales specials at your primary store 48% 41% 65% Look up recipes 43% 35% 64% Read reviews of products and brands 32% 24% 51% Use the in-store item locator 23% 14% 42% Scan QR codes or traditional barcodes of grocery type items to compare pricing across stores (for example, with Amazon) Scan QR codes or traditional barcodes of grocery type items to learn more about their nutritional value 22% 14% 42% 22% 12% 46% Source: FMI U.S. Grocery Shopper Trends, Q: While at the grocery store, how often do you use each of the following with your smartphone? (Top-2 Box) (Among shoppers with smartphones) n=849. *Kids under age 18. (See Appendix: Table A.21) CHART 1.7: DIGITAL SHOPPING BEHAVIORS BY AGE COHORT AND HOUSEHOLD TYPE Used a phone app that my grocery store provides Followed/liked my store through an online social network (Facebook, Twitter, Instagram, etc.) Provided my phone number for text messages Maintained a health profile with an in-store dietitian or nutritionist 15% 12% 9% 4% 13% 7% 5% 14% 7% 15% 4% 2% 11% 4% 16% 25% 32% 22% 23% 29% Total Households WITHOUT kids* Households WITH kids* Gen-X with kids Millennials with kids Source: FMI U.S. Grocery Shopper Trends, Q: In which of the following ways have you engaged with a supermarket or grocery store in the past 12 months? n=1,005. *Kids under age 18. (See Appendix: Table A20) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 18

19 2 Transparency Transparency is the currency of trust in the digital age In an era when information moves fast, access is at our fingertips and feedback happens almost instantaneously, transparency is emerging as a fundamental consumer demand. At the same time, consumers information needs are evolving as awareness of the personal, social and environmental impacts of food choices expands. Shoppers increasingly look to retailers to help them cut through the noise by giving them clear, practical information, empowering them to make more intentional decisions, lifting the veil on production and business practices, and facilitating closer connections to food. U.S. GROCERY SHOPPER TRENDS 2017 PAGE 19

20 Transparency invokes an ideal of trust in a culture of commercial skepticism For the food industry, transparency has represented an amalgam of perspectives, priorities and approaches, some of which are only loosely tied to consumer needs. Even a cursory search of trade and scholarly articles surfaces a jumble of concepts such as Traceability, Corporate Accountability, Supply Chain Management, Certification, and Triple-Bottom-Line Management that reflect such disparate aims as adding value, managing safety risks, ensuring quality, controlling costs, verifying sourcing or production practices, or addressing legal and ethical risks around labor. To be sure, these issues are, in various ways, relevant to today s food shoppers. But to what extent do they reflect how shoppers think about their choices? And how do they align with what today s shoppers expect from retailers? In practice, consumers don t always use the word transparency itself. Instead, they talk about openness, honesty, things being public, clear, visible, not hidden (see Figure 2.1). These associations suggest amplified expectations of businesses to be open and honest about their products and practices. They reflect shoppers ideals about how companies and the food industry should operate. FIGURE 2.1: CONSUMER DEFINITION OF TRANSPARENCY Source: The Hartman Group Transparency Against the backdrop of a food system that can sometimes seem complex, confusing and adversarial, it becomes clear that for consumers, transparency is not an end in itself. Nor is it a wish for just more information. Rather, as this year s study reveals, shoppers want transparency that serves their needs, from assurances of food safety and the pursuit of health & wellness goals to the appetite for discovery and closer connection to food. For retailers, supporting shoppers means making information clear and relevant while demonstrating a willingness and ability to listen and respond to people, not just the bottom line. Ultimately, when consumers talk about transparency, they talk about building trust, developing relationships and empowering shoppers to make decisions they can feel good about. Food companies aren t interested in being transparent. They re interested in giving the appearance of transparency. Kevin, 32 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 20

21 Transparency embodies both a rational need for information and an emotional desire for authentic connection 39 % look for store-brand products from stores I trust when deciding which food or beverages to buy* Transparency is most powerful as the experience of retailers tangible efforts to empower and support shoppers. While providing information is a fundamental element of these efforts, shoppers want retailers to do more than just make them feel informed. Shoppers are more likely to shop at a store they believe is open and honest and shares their values a feeling of connection that is fostered through practices such as making it easy to find out what is in a product or from where produce is sourced, imposing strict food safety standards on suppliers, being proactive and prompt in communicating recalls, demonstrating a commitment to treating employees well and having consumer-facing business standards (see Chart 2.1). However, shoppers don t see these practices as distinct, disconnected requirements. Shoppers who want to find out what is in a product tend also to want their stores to make it easy to find out where products are made. Those who want stores to sell certified products are also highly interested in stores that have reputations for selling high-quality goods. And the expectation that product and service issues should be openly admitted and resolved is also typically correlated to the expectation of proactive and prompt communication of recalls (see groups of color-coded responses in Chart 2.1). CHART 2.1: STORE BEHAVIORS THAT MAKE SHOPPERS MORE LIKELY TO SHOP AT A PARTICULAR STORE Easy to find out what is in a product Easy to find out sourcing of fresh produce Easy to find out where products are made Easy to find out where store gets products Easy to contact store about products/services Imposes strict food safety standards on suppliers Has a reputation for selling high-quality goods Sells products that are certified (e.g., Fair Trade) Offers product guarantees, reasonable return policies Proactive/prompt communicating recalls Openly admits and resolves product/service issues Reputation for treating employees well Employees allowed to talk about company uncensored Standards that guide practices visible to public Proactively updates consumers on business practices 70% 69% 59% 58% 55% 77% 69% 51% 77% 76% 74% 70% 42% 54% 43% GROUPED BY SHOPPER TENDENCY TO WANT BEHAVIORS DELIVERED IN TANDEM Source: FMI U.S. Grocery Shopper Trends, *Q: Which of these statements describe how you decide which food or beverage products to buy? [I look for store-brand products from stores I trust]. Shoppers n=1,084. (See Appendix: Table A.62). Q: In your opinion, which of the following would make you more or less likely to shop at a particular food store? (More likely to shop). (See Appendix: Table A.65) Item groupings determined through principal-axis (factor) analysis. U.S. GROCERY SHOPPER TRENDS 2017 PAGE 21

22 Retailer efforts to inform, reveal and connect build shopper trust and loyalty The patterns of correlated responses to what shoppers want stores to do (see Chart 2.1) reflect a set of broader dimensions that drive trust and loyalty. These dimensions reflect how shoppers understand transparency and represent qualities they attribute to retailers they believe are truly open and honest (see Figure 2.2). Understanding these underlying shopper concerns can help retailers understand how to build credibility around transparency through initiatives to inform shoppers and to reveal and connect them with the broader context of their food. Easy access to relevant information: working to deliver and remove barriers to finding the right information, while being accessible to shoppers Clear quality standards: setting, communicating and advocating for safety and quality standards for the products a retailer carries Proactivity and accountability: being willing to stand behind products and take the lead in admitting and resolving problems Fair treatment of employees: demonstrating a commitment to employee well-being (and, by extension, to shopper needs) Open about business practices: making company values visible by revealing business practices and supporting communities FIGURE 2.2: DIMENSIONS OF TRANSPARENCY Easy access to relevant information Clear quality standards Proactivity & accountability Fair treatment of employees Open about business practices What is in products Sourcing of (fresh) products Where products are made Easy contact with stores Strict safety standards Sells highquality goods Sells certified products Guarantees and return policies Proactive/ prompt recalls Admits and resolves issues Reputation for employee treatment Uncensored employees Visible standards Proactive updates Source: FMI U.S. Grocery Shopper Trends, Q: In your opinion, which of the following would make you more or less likely to shop at a particular food store? (More likely to shop). Shoppers n=1,084. (See Appendix: Table A.65) I would like to support a business that is a good corporate citizen. If there is a kind of story or humanizing aspect to a particular business, that helps earn some trust and lets me know that, hey, we re not just a food company. Alex, 36 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 22

23 Promoting and supporting shoppers ability to make intentional decisions is the foundation of transparency The most broadly held desires for information pertain to what is inside of products. Shoppers prioritize knowing what ingredients are used in products, how safely they re made and from where the ingredients are sourced (see Chart 2.2). Notably, these expectations are higher for food manufacturers than for food retailers, suggesting that shoppers hold manufacturers more responsible for disclosing what is WITHIN products. Initiatives to highlight information about ingredients, production and sourcing are most likely to resonate with Boomers and Matures (see Chart 2.2). This reflects generational differences in what shoppers believe transparency is about and what practices are most important and relevant to them. CHART 2.2: INFORMATION SHOPPERS WANT FOOD RETAILERS AND MANUFACTURERS TO BE OPEN AND HONEST ABOUT (WITHIN PRODUCTS) Food Retailer Food Manufacturer Ingredients used in food and beverage products Manufacturing processes to assure food safety Where ingredients are sourced from to make products 50% 41% 45% 59% 69% 39% 31% 35% 49% 47% 26% 20% 31% 28% 34% 63% 56% 61% 69% 74% 57% 55% 52% 59% 71% 45% Total 44% Millennials (18-38) 43% Gen-X (39-52) 49% Boomers (53-71) 47% Matures (72+) Source: FMI U.S. Grocery Shopper Trends, Q: To earn your trust, about which of the following business practices should a [FOOD RETAILER/STORE or FOOD MANUFACTURER] be open and honest? (Select all that apply). Shoppers n=1,084. (See Appendix: Tables A.63 & 64) Some stores have certain restrictions about the products they put their label on. If you buy an item with their name on it, it s not going to have X, Y or Z in it. As a consumer, that s powerful to know they have standards on their products. Jenny, 32 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 23

24 Millennial shoppers especially want to support companies that share their values and prioritize a broader good Another set of practices reveals information about elements BEYOND what is tangibly inside of food products. They aim to provide an understanding of the broader context of food products, reflect values and ethics, and speak to the desire for closer connection to the food system. Specifically, fair treatment of employees, animals and the environment are powerful ways to demonstrate a commitment to the social good (see Chart 2.3). Here, retailers are held to the same standards as manufacturers. While this raises the need for retailers to make sure they have ways of obtaining this information from manufacturers, it also suggests opportunities for retailers to create a halo of values that drives trust and credibility. In contrast to older cohorts interest in what is WITHIN products, Millennials are most apt to judge a company by its business ethics and sustainability practices (see Chart 2.3). CHART 2.3: INFORMATION SHOPPERS WANT FOOD RETAILERS AND MANUFACTURERS TO BE OPEN AND HONEST ABOUT (BEYOND THE PACKAGE) Food Retailer Food Manufacturer How employees are treated Humane treatment of animals Improving impact on environment Product/ingredient supplier choices Social responsibility - gives back to community 40% 45% 39% 37% 33% 32% 35% 33% 31% 22% 28% 34% 24% 26% 17% 27% 28% 31% 23% 23% 26% 30% 26% 23% 16% 36% 45% 31% 33% 28% 41% 45% 41% 39% 32% 30% 33% 28% 28% 28% 20% 22% 20% 20% 11% Total 24% Millennials (18-38) 29% Gen-X (39-52) 21% 23% Boomers (53-71) 16% Matures (72+) Source: FMI U.S. Grocery Shopper Trends, Q: To earn your trust, about which of the following business practices should a [FOOD RETAILER/STORE or FOOD MANUFACTURER] be open and honest? (Select all that apply). Shoppers n=1,084. (See Appendix: Tables A.63 & 64) I want to feel good about what I eat. It always feels nice if a store or company does good. There s no downside to buying cruelty-free. Kevin, 32 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 24

25 Beyond basic assurances of food safety, transparency connects most intimately to health & wellness It s no secret that health has become a primary driver of dietary decisions. Although the details of shoppers health & wellness stories may differ, their journeys tend to follow similar narrative steps (see Figure 2.3). And as shoppers evolve in their journeys, so too do their needs and shopping habits. They learn to read labels, aspire to make more intentional and informed decisions, and even find themselves venturing into areas of the store (or even entire stores) they have never shopped before. As retailers are favorably positioned to support shoppers in their wellness journeys (see Chapter 3), consideration should turn to more precisely where and how stores can be allies (or are adversaries). Providing shoppers with relevant information is essential. Beyond informing, however, retailers should strive to clearly communicate product standards, curate selections that exhibit a commitment to and competence in health & wellness, and enhance opportunities for shoppers to discover new products and find inspiration for healthy lifestyles. More broadly, today s shoppers increasingly see being more closely connected to their food as an antidote to the ills caused by a food system that seems out of balance. FIGURE 2.3: SHOPPER HEALTH & WELLNESS JOURNEY The H&W Journey Beginnings Did parents teach good habits? Supporting Shopper H&W Needs Catalysts & Triggers What happened to change H&W philosophies over time? H&W Approach How do they approach H&W as they gain knowledge or life experience? Inform Reveal Connect Daily Practices & Obstacles How does H&W actually play out in daily life? Source: The Hartman Group Health & Wellness 2017 syndicated study. Ethnographic research. We re in a transition. We re trying to change our habits, and we re taking the time to learn. You learn a lot just by being in stores, looking at and reading ingredients, and having to make decisions about what to buy. Forrest, 48 & Tanya, 45 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 25

26 Retailers have opportunities to guide and inform shoppers as they turn to fresh categories in their healthy-eating aspirations The fresh perimeter is ripe with opportunities for retailers to connect with and support shoppers. To the extent that manufacturers are on the hook for product transparency, the biggest opportunities lie in supplementing and filling in gaps in shopper knowledge around areas and attributes where definitions are murky and benefits are unclear. Shoppers, for the most part, believe that packaging satisfies their needs for seemingly concrete facts about what is WITHIN products fiber, sugar and sodium content, calories and other nutritional elements. However, shoppers want stores to provide more information and clarity about the meanings and implications of what lies BEYOND products. Complicated notions of product sourcing and animal treatment that speak to ethical practices and fuzzy definitions of product purity (e.g., non-gmo, natural ) that communicate minimal processing are areas where packaging tends to fall short (see Chart 2.4). CHART 2.4: TYPES OF PRODUCT CLAIMS THAT SHOPPERS WOULD LIKE MORE INFORMATION ABOUT Ethical Practices Minimal Processing Heart Healthy Positive Nutrition Avoiding Negatives Good Fiber 20% 31% 31% 30% 44% 43% Would like the store to provide more information 80% 69% 69% 70% 56% 57% What's on the package is enough Source: FMI U.S. Grocery Shopper Trends, Q: Which of these would you like a store to provide more information beyond what is printed on the packaging? (Select all that apply). Shoppers n=varies ( ). Note: individual product claims rolled up into net overarching groupings for analysis. (See Appendix: Table A.36) For meat and chicken and produce, it d be awesome to have more information. Like, just saying more than 100% grass-fed. What does that mean compared to something that isn t? Jenny, 32 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 26

27 Retailers have opportunities to help shoppers navigate center-store categories, as well While shoppers may be recalibrating the balance of their interest between center store and periphery, they are not abandoning the center. Rather, they are increasingly trading up across categories as they seek to live healthier lifestyles. Learning to navigate packaged foods can sometimes be difficult and time consuming, particularly in categories where health and quality distinctions may not be immediately evident to shoppers just beginning their journeys or where the simple breadth of choices may be overwhelming. Among the top health claims that shoppers look for on products are those that cue absence of negative ingredients (e.g., low sugar, low sodium, no artificial ingredients, no preservatives; see Chart 2.5). Yet, while packaging generally does a good job of providing this type information, retailers can shore up their credibility as wellness partners by helping shoppers more quickly and confidently find products they seek and tailor their shopping experience to their individual and familial needs. If you re trying to make a conscious effort to know what you re giving your family, then information is important in packaged food, because that s where the mystery lies. Manufacturers should give me information about ingredients that s clear and not trying to hide anything. The store should have good areas where I know I can go into a certain section and everything is going to be healthy. Rona, 45 CHART 2.5: PRODUCT CLAIMS SHOPPERS LOOK FOR Low sugar Low sodium No artificial ingredients Whole grain No trans fats High fiber No preservatives No added hormones Natural Non-GMO Low calorie No/Low fat No HFCS Low/Lowers cholesterol Certified organic Low carb Vitamin-enriched Heart healthy Free-range Antioxidant-rich Grass-fed Cage-free Calcium-fortified Certified humane Fair trade Gluten-free No allergens 33% 32% 30% 30% 28% 28% 28% 25% 24% 23% 21% 21% 19% 16% 16% 16% 14% 13% 13% 12% 12% 12% 10% 9% 8% 7% 7% Source: FMI U.S. Grocery Shopper Trends, Q: What health claims do you look for on the package when purchasing a food product? (Select all that apply). Shoppers n=2,145. (See Appendix: Tables A.34 & 35) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 27

28 Moderate interest in QR codes and the like indicates a high potential for teachability Retailers have a range of options for how they inform, reveal and connect, and QR codes are one of them. While almost half (45%) of shoppers say they are not at all likely to scan a QR code or other type of label, over half are at least somewhat likely to make the effort (see Chart 2.6). Despite only 16% indicating they would be very likely to scan, there is reason to be optimistic about scanable labels as a medium for enhancing food transparency. Overall, a small minority of shoppers show high interest in this medium, while a majority are simply receptive. But Millennials show much stronger interest than other cohorts, suggesting that the broader muted interest may be at least somewhat attributable to a lack of familiarity with the technology. At the outset, there seems to be a relatively substantial group of shoppers to target, and increased exposure and opportunities to learn about and experience QR codes may drive trial and grow future interest among even more shoppers. CHART 2.6: SHOPPER LIKELIHOOD TO SCAN A QR CODE/LABEL 45% 28% 45% 57% 74% 45% 39% 16% Total 27% Millennials (18-38) 41% 14% Gen X (39-52) 35% 21% 8% 5% Boomer (53-71) Mature (72+) Not at all likely Somewhat likely Very likely Source: FMI U.S. Shopper Trends, Q: If a product you are considering purchasing at the grocery store had a QR code or other type of label to find out more about the product through your smartphone or other device, how likely would you be to scan the label to find out more specific product details? Shoppers n=2,145. (See Appendix: Tables A.60 & 61) I know there are certain vitamins where you can scan the box and find out when it was manufactured, who did it, where. It s very detailed. The people in the store showed me how to do it, and I liked it. It d be good to have that on food, too. Tanya, 45 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 28

29 However, the industry will need to ensure that scan-able labels are relevant and easy to use For shoppers who are not at all likely to scan a QR code, lack of interest is a top reason. Nearly a third (32%) of these shoppers or 45% among Millennials simply don t really care (see Table 2.1). Inconvenience constitutes another barrier. Roughly a third (31%) imagine it would take too much time, a feeling amplified among Millennials (51%). These numbers not only imply that many shoppers would rather use their time in the store for other activities, they also TABLE 2.1: REASONS SHOPPERS WON T SCAN A QR CODE/LABEL NOT LIKELY to scan reflect expectations that, in an age of instantaneous communication, access to relevant information should be easy and shoppers should not have to work for it. The upside here is that there doesn t seem to be much of a downside. As suggested above, assumptions about how much time scanning a code would take are surely inflated by a lack of firsthand experience. Moreover, relatively few shoppers indicate that everything I need to know is already on the packaging (24%), suggesting that, beyond apathy, there exists a latent need for information beyond the box (see Table 2.1). So while QR codes may not meet everyone s needs, to the extent that they do work for those who would use them, they may serve to enhance trust by providing a proof point of the retailer s willingness to support and prioritize shopper needs. Total Millennial (18-28) Gen X (39-52) Boomer (53-71) Mature (72+) % of Shoppers 45% 28% 45% 57% 74% I don't really care 32% 45% 38% 26% 16% It would take too much time Everything I need to know is already on the packaging 31% 51% 36% 23% 11% 24% 23% 27% 24% 21% Source: FMI U.S. Shopper Trends, Q: You indicated you were NOT LIKELY to scan a QR code or other label to find out more about a product. Why is that? Shoppers (among those who said not likely ) n=1,012. (See Appendix: Tables A.60 & 61) Food for Thought: Some shoppers indicate that QR codes and similar labels seem removed and distant. They speak of the desire to have a more human or personal touch, such as hand written signage that shows a store is taking an active role in providing information. How might retailers use transparency practices to empower shoppers to participate and even influence the food system? U.S. GROCERY SHOPPER TRENDS 2017 PAGE 29

30 Among shoppers willing to scan a label, ingredient and product sourcing, production and animal welfare are top concerns So, how can retailers ensure that initiatives like QR codes or SmartLabel* are giving shoppers the information they want? Providing information about what is in products is not the place to start. Instead, shoppers who are at least somewhat likely to use QR codes will be seeking a deeper understanding of where ingredients were sourced from (48%), the country of origin of food and beverages (46%), how products were manufactured (38%) and how animals were treated (31%) (see Chart 2.7). CHART 2.7: PRODUCT CLAIMS SHOPPERS WANT MORE INFORMATION ABOUT (AMONG THOSE LIKELY TO SCAN A QR CODE/LABEL) Sourcing of ingredients Country of origin Manufacturing processes Animal welfare No preservatives No artificial ingredients No added hormones Natural Non-GMO Low sodium Low sugar No trans fats High fiber Certified organic Whole grain No HFCS Low calorie Free-range Cage-free Low carb 22% 22% 20% 20% 20% 19% 19% 17% 16% 16% 15% 13% 12% 11% 11% 11% 38% 31% 48% 46% Source: FMI U.S. Grocery Shopper Trends, Q: You indicated that you were SOMEWHAT/VERY LIKELY to scan a QR code or other type of label to find out more about a product. Which of these would you be interested in learning more about? (Select all that apply). Shoppers n=1,133. (See Appendix: Tables A.60 & 61) * For more information on SmartLabel, go to I think all stores are going to have to be more responsive. People are demanding to know things like where their food is coming from and how animals are raised. And when customers are demanding it, then retailers are demanding it from their suppliers. Janine, 53 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 30

31 Shoppers need more information than labels provide about product attributes BEYOND undisputed ingredients and nutrients Areas of shopper ambiguity and confusion represent the greatest opportunities for retailers to provide support, shore up credibility and deploy enhanced information initiatives, such as QR codes or SmartLabel, but also at-shelf guidance and adjacent in-store experiences. Shoppers tend to find labels sufficient for product claims that are objectively verifiable or tend to be clear and well defined in their minds claims mostly connected to what is inside products. In the right-hand column below, for example, only 22% of shoppers who look for low-carb or low-sugar claims want more information from a store (see Chart 2.8). Shoppers report wanting more guidance for claims that may be somewhat more contentious, overused or subjective, as with those in the center column below. As seen in the center column below, shoppers interested in products with no artificial ingredients or no preservatives (34% and 27%, respectively) would look to a store to provide greater clarity. Shoppers feel most lost when parsing claims pertaining to fresh categories. These tend to reflect aspects of food production and sourcing into which there is less visibility or where there is uncertainty about impacts. More than 40% of shoppers who seek out Fair Trade, Certified Humane or natural products report wanting more information about these claims from stores (see Chart 2.8). CHART 2.8: PRODUCT CLAIMS SHOPPERS WANT MORE INFORMATION ABOUT (AMONG THOSE WHO SEEK EACH CLAIM) Shoppers need more info Shoppers need guidance Label is often good enough Fair trade 44% No artificial ingredients 34% Low carb 22% Certified humane 43% Antioxidant-rich 32% Low sugar 22% Natural 41% Gluten-free 30% No allergens 21% Certified organic 40% Grass-fed 28% Low sodium 21% Cage-free 39% No preservatives 27% Whole grain 19% Free-range 38% Vitamin-enriched 27% No HFCS 19% No added hormones 37% Low cholesterol 26% High fiber 17% Heart healthy 37% No trans fats 23% Low calorie 17% Non-GMO 37% Calcium-fortified 22% No/Low fat 15% Uncertainty whether these issues BEYOND the product affect what is WITHIN Label claims are questioned, perhaps because contentious or have different meanings to different shoppers WITHIN product presence is clearly defined Source: FMI U.S. Grocery Shopper Trends, Q: Among these claims that you look for, which of these would you like a store to provide information beyond what is printed on the packaging? Shoppers n=varies (63-362). Results reflect responses of only those who look for claim on product. (See Appendix: Table A.36) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 31

32 Food shoppers think food retailers do a better job at exposing and controlling what s WITHIN products than engaging them BEYOND products When asked to rate their stores in terms of specific aspects of transparency, consumers awarded the highest ratings for dimensions related to what s WITHIN products. Safety rises to the top, e.g., ensuring products are free of contaminations (7.75), followed closely by making it easy to determine which products meet my family s dietary needs (7.6; see Chart 2.9). However, retailer ratings dip when it comes to measures of transparency that go BEYOND product composition supporting the community and helping shoppers learn about food makers and their stories. These dimensions, consequently, offer greater opportunity for retailers to take specific actions to distinguish themselves as leaders in transparency. Based on higher overall transparency scores on all dimensions of transparency, channel leaders in transparency include Natural/Organic, Club, and Fresh-focused traditional grocery stores. Other retail leaders include Online-only stores and midmarket traditional supermarkets in aggregate. Trailing behind are the Discount, Convenience, Supercenter, Dollar, Drug and Value-focused grocery stores that are less likely to engage with or connect shoppers to food culture (see Chart 2.9). CHART 2.9: SHOPPER AVERAGE RATING ON DIMENSIONS OF TRANSPARENCY ACROSS ALL RETAILERS Ensuring products are free of contaminations Making it easy to determine which products meet my family's dietary needs Having knowledgeable employees Ensuring dairy/meat/deli products are free of chemicals, pesticides and hormones Being open and honest about their business practices Supporting my local community Helping me learn about food makers and their stories Retail channel LEADERS in transparency Natural + Organic Online-only Club Fresh-focused Midmarket traditional grocery stores Retail channel TRAILERS in transparency Discount Convenience Supercenter Limited Dollar Drug Value-focused traditional grocery stores Source: FMI U.S. Grocery Shopper Trends, Q: Of these stores where you shop, please rate how well each of these stores perform when it comes to? (Average rating on 10pt scale across 61 store banners). n=1,084. Store leaders and trailers determined by channels average score across all transparency dimensions. Leaders are channels that rate higher than the median score and Trailers are channels that rate lower than the median score. (See Appendix: Tables A.68A & 68B) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 32

33 Transparency helps transform a retailer from just a store to an ally When stores are ranked on the broadest measure of how well they meet shoppers overall needs, there are also no surprises in where they fall. Retailers who have garnered reputations for being proactive in their efforts to inform and reveal and for being advocates for closer connections between shoppers and the food system enjoy the highest ratings (see Chart 2.10). The lesson is clear. Transparency practices cultivate trust between shoppers and their stores. Open and honest communication humanizes a company, turning a transactional exchange into a brand relationship. Grocery retailers have long strived to serve a diverse, mass American public in part through positioning the store as a relatively neutral environment in which shoppers can freely choose from a broad-ranging, unbiased product selection. But as shoppers become more discerning in their scrutiny and evaluation of retailers, there s no privilege of neutrality. Shoppers are quick to distinguish between stores that are just places to buy things and those they see as partners in their and their families goals and aspirations. CHART 2.10: OVERALL SHOPPER RATINGS OF HOW WELL STORES ARE MEETING NEEDS BY LEADERS AND TRAILERS IN TRANSPARENCY LEADERS IN TRANSPARENCY TRAILERS IN TRANSPARENCY Channels: Natural + Organic, Online-only, Club, Fresh-focused and Midmarket traditional grocery stores Channels: Discount, Convenience, Supercenter, Limited, Dollar, Drug and Value-focused traditional grocery stores Source: FMI Grocery Shopper Trends, Q: All things considered, how well would you rate the job each of these stores are doing in meeting your needs? (scale of 1 to 10, 1=poor and 10=excellent) Shoppers n=varies (58-753). Retail Leaders and Trailers in transparency derived from a comparison of store channels across all dimensions in transparency measured. (See Appendix: Table A.15A) Some retailers actually promote their philosophy. I know what their philosophy is because I can talk to the staff, they have leaflets and signs. You can have a personal relationship with them. Other retailers don t publicize their philosophy. They just have things on the shelf. Bekah, 32 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 33

34 Retailers can think of transparency as a strategy for ensuring future relevance in a fiercely competitive landscape We began our discussion by noting the occasional discord between the food industry s and the consumer s definitions of transparency. But retailers have much to gain by tuning their practices to shopper priorities and needs. In some cases, lack of additional information may not necessarily be a deal breaker, but providing it can serve as a deal maker. Developing practices that inform, reveal and connect can transform retailers from transactional agents to valued partners and allies, accruing benefits for both shoppers and stores (see Figure 2.4). For shoppers, retailer efforts to provide clear, practical, relevant information about what is in products help them make good choices for their and their families health & wellness. For retailers, delivering these types of information also benefits supply chain management, helping to reduce inefficiencies and risks while also enabling them to exercise industry leadership via clear, consumer-facing quality standards and proactive communication and accountability. Targeted initiatives that reveal the wider contexts of food production allow shoppers to experience emotional connections with food. These practices help shoppers exercise their values, feel good about the products they buy and the companies they support, and enjoy reciprocal relationships with makers and sellers. As levers that help foster halos of credibility and competence, transparency practices help grow shopper trust and loyalty. The broader reward is that they also provide support for retailers initiatives to differentiate themselves and meet today s evolving shopper needs. FIGURE 2.4: TRANSPARENCY PRACTICES AND BENEFITS FOR SHOPPERS AND RETAILERS WITHIN BEYOND Easy access to relevant information Clear quality standards Proactivity & accountability Fair treatment of employees Open about business practices SHOPPER BENEFITS Make good choices for family s health & wellness Experience emotional connection with food Manage supply chain RETAILER BENEFITS Build credibility with generations of shoppers Build shopper trust and loyalty I d be concerned that if a retailer provides me information that it might all just be advertising. Transparency means there s no hidden agenda, no disguises. I m reading things often, looking stuff up on my phone, trying to make an informed decision. That information helps me as a consumer. It makes me feel more comfortable. Forrest, 48 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 34

35 3 Shopper Trends and Values Connecting with today s shopper means becoming fluent in food culture Today s grocery landscape is fiercely competitive, with specialists and innovators constantly raising the stakes and driving shopper expectations ever higher. In order to stay relevant, retailers must make demonstrating competence in food culture the backbone of their initiatives and innovations. Shoppers desire for a closer connection to their food increasingly places more focus on a food retailer s safety, health, inspiration and ethical practices. But all of these are increasingly judged under the halo (or lack thereof) of a grocer s fluency in the trends and values driving today s shoppers. U.S. GROCERY SHOPPER TRENDS 2017 PAGE 35

36 Competence in food culture is key to credibly demonstrating understanding of shopper trends and values As shoppers become more sophisticated in evaluating retailers, retailer credibility and competence become increasingly important for successfully delivering benefits around safety, health, inspiration and social impact. Consumer tolerance for transparency practices that are staged or seem phony is thinning out. Retailers who prioritize connecting with shoppers are careful to approach their relationships with authenticity and respect. In turn, shoppers reward retailers with loyalty. Many shopper priorities are driven by our evolving food culture (see Figure 3.1). Food safety represents the baseline expectation consumers have for the food they eat that it will do them no harm. Personal wellness aspirations and/or health needs strengthen the demand for food that s better for you. Food systems should support social good through ethical practices while engaging consumers through inspiration and discovery. FIGURE 3.1: FOOD CULTURE-DRIVEN SHOPPER PRIORITIES FOOD SAFETY HEALTH & WELLNESS SOCIAL GOOD INSPIRATION & Free of contaminants Rotation of perishables Safe handling Rapid response to recalls Avoiding negative ingredients Positive nutrition Minimal processing Ally in wellness Ethical practices Animal welfare Employee welfare Locally grown Reducing food waste DISCOVERY Support for exploration and spontaneity Family meals: Inspiration for meal ideas Everything looks brighter and shinier in some of these updated mainstream supermarkets, but it has nothing to do with the actual food. It s all just window dressing. Alex, 36 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 36

37 Consumers are increasingly reliant on government institutions to help ensure food is safe 95 % of U.S. shoppers TRUST their grocery store to ensure that the food they purchase is SAFE (compared to 94% in 2016) Shoppers may trust the food from the grocery store, but this is due (in part) to the large amount of trust they put in government organizations, such as the FDA and USDA, which monitor and regulate to ensure food safety across the food chain (see Table 3.1). As consumers demand greater visibility into the sources and methods in which their food is produced, farmers have emerged as a more significant ally in ensuring food is safe. The increasing relevance of farmers and the agencies that regulate them likely arises from the broader cultural shift towards fresh, less processed food qualities and choices. While most consumers believe the greatest risk for safety problems is at the processing plant, shoppers rely on grocery stores to monitor and care for inventory with consumers best interests as a priority (see Chart 3.1). Alternatively, while some consumers may appreciate consumer watchdog groups for the information and research they provide, fewer consumers view them as effective as other groups or entities for ensuring food safety. TABLE 3.1: PARTIES SHOPPERS RELY ON MOST TO ENSURE FOOD PURCHASED IS SAFE, Year Number of Shoppers: n=1, Myself as an individual 51% 58% 58% 58% 63% 64% 61% 57% Food and Drug Administration (FDA) * * * * * 53% 54% 56% U.S. Department of Agriculture (USDA) * * * * * 49% 50% 51% Food Stores 29% 28% 32% 36% 42% 41% 40% 39% Manufacturers/Food Processors 29% 35% 37% 38% 38% 41% 42% 38% Farmers 10% 10% 15% 19% 19% 23% 21% 23% Government Organizations 27% 28% 30% 32% 43% 34% 22% 21% Consumer Groups 10% 9% 12% 15% 18% 17% 16% 17% Source: FMI U.S. Shopper Trends, Q: How much do you agree or disagree with the following statement [I trust my grocery store to ensure that the food I purchase is safe]? Top-2 Box Agree. (See Appendix: Table A.48). Q: Who do you rely on the most to ensure that the products you buy in your grocery store are safe? n=1, ; n=1, ; n=1, ; n= ; n= ; n= ; n= * Other added to Government institutions choice in (See Appendix: Table A.47) CHART 3.1: WHERE SHOPPERS BELIEVE FOOD SAFETY PROBLEMS MOST LIKELY TO OCCUR ALONG THE FOOD SUPPLY CHAIN 4% Grocery store 5% Transport 9% Stored at warehouse 5% Farm 49% Food processing/manufacturing plants 10% Restaurant 7% Home 11% Not sure F OOD S UPPLY C HAIN Source: FMI U.S. Shopper Trends, Q: Where do you think food-safety problems are most likely to occur? (Please select one) Shoppers n=1,061. (See Appendix: Table A.51) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 37

38 What s in a label? Shoppers rely on dates marked on packaging to gauge whether food is safe Shoppers recognize product label dates as a guide to help them make better choices and to ensure better quality and food safety. For some, sacrificing quality may be perceived as worth it for a discount, but sacrificing safety rarely is. While it appears consumers see only a slight difference between types of labels, there is a minority of shoppers who see a clear difference. For shoppers who recognize a difference, Use by labeling provides an important cue for food safety, especially for perishables. Buying something past the date isn t thought to be a good idea, and using it past then is thought to present an elevated health risk (see Chart 3.3). Best by and Sell by dates appear to be essentially interchangeable (see Chart 3.2). CHART 3.2: CONSUMER PERCEPTIONS ASSOCIATED WITH VARIOUS PRODUCT LABEL DATE FORMATS Lower quality Less safe A good choice at a discount Past BEST BY date 76% Past SELL BY date 75% 70% 70% 70% 70% Past USE BY date 76% 73% 66% Source: FMI U.S. Shopper Trends, Q: Imagine you saw [an expiration date] stamped on a food product... Three days past its [BEST BY/SELL BY/USE BY] date. How likely is it that the food product would be...? Top-2 box Somewhat/Very Likely. n=varies ( ). (See Appendix: Table A.53) CHART 3.3: PERCEIVED HEALTH RISKS IN FOOD CONSUMPTION Shopper perception of health risk due to 38% 41% 71% 73% 79% 22% 19% 41% 24% 11% 13% 14% Eating food past its "BEST BY" date Eating food past its "SELL BY" date Eating food past its "USE BY" date A slight health risk Some health risk A serious health risk Source: FMI U.S. Shopper Trends, Q: How much of a health risk do you believe each of the following food-related items present? Shoppers n=1,061. (See Appendix: Table A.52) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 38

39 Shoppers are much more concerned about mishandling or malice than about eating foods past expiration dates While clearer, more consistent labeling may help and certainly won t hurt, shoppers themselves don t perceive their misreading of these labels as much of a risk when compared to the risks posed by food mishandling or malicious actors intentionally tampering with their food (see Chart 3.4). However, consumers believe retailers are doing a good job of minimizing risk. Even considering all the other places things can go wrong, 87% of shoppers say they are confident that the food they purchase at the grocery store is safe (see Chart 3.5). Shoppers also assume a degree of personal responsibility in food safety, looking for cues to determine the level of trust they may instill in a particular store. If a store is seen to neglect proper inventory management of perishable goods, shoppers often say they just won t buy products from those departments. Once lost, consumer confidence can be difficult for a retailer to regain. CHART 3.4: FOOD CONDITIONS SHOPPERS BELIEVE POSE AT LEAST SOME HEALTH RISK Contamination by bacteria or germs Residues, such as pesticides and herbicides Product tampering Terrorists tampering with the food supply Antibiotics and hormones used on poultry or livestock Food from China Foods produced by biotechnology or GMOs Irradiated foods Food handling in supermarkets Eating food past the 'USE BY' date Eating food past the 'BEST BY' date Eating food past the 'SELL BY' date 74% 68% 62% 57% 56% 51% 45% 44% 41% 39% 34% 32% Source: FMI U.S. Shopper Trends, Q: How much of a health risk do you believe each of the following food-related items present? (Top-2 box: some/serious health risk). Shoppers n=1,061. (See Appendix: Table A.52) CHART 3.5: CONSUMERS MOSTLY OR COMPLETELY CONFIDENT IN SAFETY OF FOOD FROM GROCERY STORES OR RESTAURANTS Grocery stores 85% 66% 86% 84% 68% 72% 87% 76% Restaurants 43% Source: FMI U.S. Shopper Trends, Q: How confident are you that the food from a [grocery store/restaurant] is safe? n=1, ; n=1, ; n=1, ; n= ; n= ; n= ; n= (See Appendix: Tables A.49 & 50) It depends on the store. Some stores I don t trust their meat or seafood department. I wouldn t buy from them. Patrick, 57 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 39

40 When recalls happen, two-thirds of shoppers respond by checking their food supplies at home Occasionally, food safety issues do appear. If a recall is warranted, most shoppers take responsibility to check their cupboards to make sure they don t have the product on hand. For one in six shoppers, recalls prompt them to stop purchasing the product altogether (see Chart 3.6). While some of the safety concerns are related to specific recalls, others stem from a concern about the methods used in producing food. Some categories are believed to carry a greater risk, prompting shoppers to prevent problems by restricting the types of food they will purchase. Some avoid nonorganic meats due to concerns about the risks of ingesting chemicals, hormones or antibiotics. Others avoid meats and seafood imported from outside the U.S. because of the perceived lack of government oversight or transparency in how animals are raised, treated and processed. Consumers also worry about sustainability and the impact of how food is grown, processed and transported. CHART 3.6: CONSUMER RESPONSES TO FOOD RECALL NOTIFICATIONS I check my current food supplies to make sure I don't have the recalled product I rely on my supermarket to ensure the food I purchase is safe I check with my grocery store to find out if they have pulled the recalled product I never purchase the product again I typically don't do anything when I hear about food recalls 27% 22% 13% 13% 67% Source: FMI U.S. Shopper Trends, Q: When you become aware that a specific food has been recalled, which of the following do you do? (Select all that apply) Shoppers n= (See Appendix: Table A.55) Food recalls in this past year, such as widely reported hummus and ice cream recalls, induced some shoppers to stop purchasing the product category and/or specific brands (see Figure 3.2). Other product categories suffer shopper attrition as a response to concerns about sustainability and transparency. For example, some shoppers hear about how animals are raised or workers are treated outside of the U.S. and in response sometimes become wary about both the safety and the moral hazards they d rather avoid. FIGURE 3.2: PRODUCTS SHOPPERS HAVE STOPPED PURCHASING IN PAST 12 MONTHS Source: FMI U.S. Shopper Trends, Q: In the past 12 months, have you stopped purchasing any food products because of safety concerns? Shoppers n= Note: Figure represents 15% of shoppers who say they have stopped purchasing products due to safety concerns. (See Appendix: Table A.55) Food for Thought: Consumers depend on swift action when food safety issues are discovered. How can retailers respond more decisively and openly to safety issues to build even greater trust and loyalty with shoppers? U.S. GROCERY SHOPPER TRENDS 2017 PAGE 40

41 Shoppers prioritize the perimeter as the fresh, less processed trend continues While some shoppers avoid or seek to minimize specific types of ingredients for specific health concerns, many shoppers read these same claims for cues of freshness or purity to avoid attributes they associate with processing and lower quality (see Chart 3.7). While the intersection of health aspirations and food culture has led shoppers toward the fresh perimeter of the grocery store, retailers can also help shoppers seeking minimally processed products by considering ways to promote and support them in the center store. CHART 3.7: PRODUCT CLAIMS SOUGHT BY SHOPPERS Low sugar Low sodium No added hormones* Low calorie No/Low fat Low carb No allergens* No artificial ingredients No trans fats No preservatives Natural Non-GMO No HFCS Certified organic Gluten-free Whole grain High fiber Free-range* Grass-fed* Cage-free* Certified humane* Fair trade* Vitamin-enriched Antioxident-rich Calcium-fortified Low/Lowers cholesterol Heart healthy 7% 7% 13% 12% 12% 9% 8% 14% 12% 10% 16% 13% 25% 21% 21% 16% Source: FMI U.S. Grocery Shopper Trends, Q: What health claims do you look for on the package when purchasing a food product? (Select all that apply). Shoppers n=2,145. *Added in (See Appendix: Tables A.34 & 35) Item groupings derived from principal-axis (factor) analysis. 33% 32% 30% 28% 28% 24% 23% 19% 16% 30% 28% 65% Avoid Negatives 59% Minimal Processing 41% Good Fiber 25% Ethical Practices 25% Positive Nutrition 23% Heart Health Our priorities have changed. It used to be that getting what was cheapest was the priority, but now it s quality over price. We ve moved away from most canned foods, too. It s hard because now we hardly use any coupons because most are for stuff in the center of the store. Forrest, 48 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 41

42 Shoppers tend to want more information about ethical practices and minimal processing As consumer demand for openness and transparency becomes increasingly important, shoppers want stores to establish clarity around claims where the packaging alone carries insufficient information or context. When asked about specific claims they want to know more about, shoppers were most curious about items that related to ethical practices or minimal processing. Claims are especially challenging to shoppers when they lack clear definition, clear standards or specificity about the regulations being followed. But shoppers not only want to know more about murky notions like natural, they also want to know the stories behind their food, from where it s sourced (e.g., Fair Trade), how it s made (e.g., Certified Humane) and about the ethical practices companies embrace (see Chart 3.8). Due to the direct relationship food stores have with shoppers, retailers have a privileged opportunity to deepen their engagement with customers by helping tell these stories, bridging the gap between consumers and makers. CHART 3.8: PRODUCT CLAIMS ABOUT WHICH SHOPPERS WOULD LIKE MORE INFORMATION TYPES OF PRODUCT CLAIMS % SHOPPERS SEEKING PRODUCT CLAIM % SHOPPERS WHO WANT MORE INFORMATION (AMONG THOSE SEEKING CLAIM) SPECIFIC CLAIMS WHERE SHOPPERS WANT MORE INFORMATION (TOP TEN OVERALL) Avoiding Negatives 65% 30% No added hormones Minimal Processing Good Fiber 59% 41% 20% 43% Natural Certified organic Non-GMO No artificial ingredients Ethical Practices Positive Nutrition 25% 25% 31% 44% Fair Trade Certified Humane Cage-free Free-range Heart Healthy 23% 31% Reduced risk of heart disease Source: FMI U.S. Grocery Shopper Trends, Q: Which of these would you like a store to provide more information beyond what is printed on the packaging? (Select all that apply). Shoppers n=varies ( ). Note: individual product claims rolled up into net overarching groupings for analysis. (See Appendix: Tables A.34-36) Food for Thought: As shoppers seek quality via fresh, less processed claims and categories, they rely on food retail as the most important medium for learning about health and wellness food distinctions. How might food-centric stores maintain and build upon their current advantage as a healthy destination? U.S. GROCERY SHOPPER TRENDS 2017 PAGE 42

43 Shoppers remain wary of GMOs 4 in 10 try to avoid them altogether Consumers have maintained their general negative disposition toward GMOs. While one out of every four shoppers is actively seeking non-gmo products, an additional 18% say they would generally try to avoid or minimize GMOs in the products they purchase (see Chart 3.9). CHART 3.9: SHOPPER AVOIDANCE OF GMOs Currently seek non-gmo 23% vs. 25% in 2016 Do not currently seek non-gmo 77% Trying to avoid/minimize GMOs 23% 18% 59% 41% vs. 45% in 2015 Source: FMI U.S. Shopper Trends, Q: What health claims do you look for on the package when purchasing a food product? (Non- GMO) Shoppers n=2,145. (See Appendix: Table A.33). Q: Please indicate whether you are trying to avoid or make sure to get any of the following foods or beverages. (GMOs Avoid or minimize)? Shoppers n=1,061. (See Appendix: Table A.57) For many consumers, desire for transparency drives avoidance of GMOs For some shoppers, avoiding GMOs is about personal health, while others simply want transparency in the foods they eat. Evaluating processed foods challenges many consumers, especially when they see unrecognizable ingredients or mysterious manufacturing methods used. Concern about the unknown drives many consumers to be hesitant or mistrustful of GMOs. Nearly half of U.S. consumers who are avoiding GMOs are concerned about not knowing exactly what goes into the food they eat, and one out of four says they just don t know enough about them (see Chart 3.10). CHART 3.10: REASONS FOR AVOIDING GMOs, AMONG SHOPPERS TRYING TO AVOID GMOs I'm concerned about their possible impact on my personal health and well-being I just want my food to be as natural/un-altered as possible I just want to know exactly what goes into the food I eat I'm concerned about the possible impact on the environment I don't want to support companies that use GMOs I'm concerned about plant biodiversity I don't know enough about them I don't mind using some of them, but I want to know if they are in the food I eat 26% 23% 13% 35% 32% 48% 64% 62% Source: FMI U.S. Shopper Trends, Q: What are your main concerns with genetically modified organisms (GMOs)? Shoppers (trying to avoid GMOs) n=430. (See Appendix: Table A.57) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 43

44 Local helps fulfil consumer desire to know what is in the food they eat 94 % of U.S. shoppers purchase LOCALLY GROWN products at least occasionally (No change from 2015) personally passionate, accountable and committed to quality. Shoppers expect local food to deliver the perceived benefits of being fresh and in-season, and for over one-third of shoppers, buying local products connects to their desire for greater understanding about and connection to their food. Shoppers like knowing where their food comes from, how it is grown and how it is produced (see Charts 3.11 and 3.12). Buying local is believed as well to support local economies and build the vitality of communities. Shoppers tend to perceive local food producers as being smaller scale than large, national companies, and therefore as being more CHART 3.11: FREQUENCY OF PURCHASING LOCALLY GROWN PRODUCTS I purchase locally grown products... 6% Never CHART 3.12: REASONS SHOPPERS PURCHASE LOCALLY GROWN PRODUCTS Freshness or in season Support the local economy 65% 72% 80% Occasionally Taste Like knowing the source of the product or how it is grown or produced Price Nutritional value Environment impact of transporting foods across great distances Appearance 54% 40% 34% 33% 27% 26% 14% Always Long-term personal health effects 14% Source: FMI U.S. Grocery Shopper Trends, Q: Which of these best describes how often you purchase locally grown products? Shoppers n=1,084. Q: Which of the following are reasons you buy locally grown foods in your grocery store? (Select all that apply). Among shoppers who purchase locally grown products, n=1,018. (See Appendix: Tables A.58 & 59) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 44

45 At home, shoppers look for efficiencies in their own household supply chain Beyond common recycling behaviors, most shoppers are planning ahead and looking for ways to economize and reduce waste. Eight out of every ten shoppers are making an intentional effort to buy only as much as their households will use (see Chart 3.13). Sometimes shoppers buy locally grown products primarily to connect more directly with producers, but sometimes it s more about reducing waste: buying local is perceived to reduce packaging and shipping materials, energy use, transit times and spoilage. Food waste is understood to dilute the positive impact of sustainable behaviors and to contribute to the problem of hunger, and shoppers increasingly recognize food waste as a problem they cannot ignore. Visible inefficiencies highlight for them the discord of a food system that suffers from both oversupply and scarcity. CHART 3.13: SUSTAINABLE BEHAVIORS SHOPPERS PRACTICE REGULARLY OR CONSISTENTLY Reuse plastic grocery bags Use high-efficiency (energy saving) light bulbs Buy only as much as we can use Recycle cans Recycle plastic Recycle paper Buy locally grown products Encourage everyone to finish what's on their plate Bring your own bags to the grocery store Use environmentally friendly cleaning products Use rechargeable batteries 46% 36% 81% 81% 80% 75% 73% 69% 61% 58% 52% Food Waste Local Source: FMI U.S. Grocery Shopper Trends, Q: Which of these do you do on a regular or consistent basis? (Select all that apply). Shoppers n=1,084. (See Appendix: Table A.56) Food for Thought: Is your store doing all it can to support shoppers seeking to minimize food waste at home, and is your store letting shoppers know what you are doing? How much more could shoppers rely on fresh food if they could ease their concerns about waste? U.S. GROCERY SHOPPER TRENDS 2017 PAGE 45

46 Consumers continue to see their primary store as an ally in their wellness Food stores are among the most trusted allies helping consumers meet their wellness needs, supported not only by the breadth of health-positioned packaged goods sold but also by the convenience of grab-and-go, ready-to-eat options perceived as healthier than restaurant fare. While still considered at odds with personal wellness, food service and manufacturers appear to have made some recent progress in earning some good will among consumers (see Chart 3.14). By contrast, food stores have gained no ground during this same period. This gentle shift underscores the fact that retailers cannot take their higher ground for granted and should instead be thinking about how to bolster and ensure the success of wellness initiatives to support and partner with shoppers. CHART 3.14: ALLIES IN WELLNESS WHO HELPS KEEP CONSUMERS HEALTHY My family Doctors My friends Farmers Fitness/health clubs My primary food store Health insurance companies Food stores in general Drug stores Local restaurants The news media Food manufacturers Celebrity chefs Government institutions The entertainment industry Fast food restaurants Working against me 6% 5% 6% 5% 6% 6% 22% 9% 11% [-4pts.] 11% 24% [-4pts.] 29% 16% 25% 30% [-6pts.] 47% Working for me 70% 64% 61% 53% 48% 45% 33% 33% 32% 32% 20% [+7pts.] 19% [+6pts.] 19% 18% 16% [+7pts.] 15% [+6pts.] Source: FMI U.S. Grocery Shopper Trends, Q: When it comes to helping you stay healthy, which of these people and institutions would you say tend to be on your side (helping you), and which tend to be working against you (making it more difficult for you to stay healthy)? n=1,061. Note: percentage points difference from 2016 results shown in brackets are significant at p<.05 level. (See Appendix: Tables A.45 & 46) I love that my store does things like include information on ANDI scores or puts in effort to think about how they put things on the shelf, because they re trying to promote healthy eating. Bekah, 32 U.S. GROCERY SHOPPER TRENDS 2017 PAGE 46

47 When eating healthy is a priority, consumers agree that food prepared at home helps them stay on track 78 % of U.S. shoppers are concerned about the nutritional content in the food they eat (compared to 82% in 2016) As consumers seek to improve their overall health, they place emphasis on the content and quality of the food they eat (see Table 3.2). Beyond efforts to simply try to avoid foods that may not be good for them, many consumers are concerned about the nutritional density of the food they do eat. Driven by concerns about nutritionally deficient foods and diets, consumers often aspire to eat more real, whole foods processed as little as possible in order to retain their inherent goodness. TABLE 3.2: CONSUMERS TOP CONCERNS REGARDING NUTRITIONAL CONTENT OF FOOD EATEN Why concerned about nutritional content of food? difference I'm concerned about my health in general 61% 54% -7 pts. Some of the food I eat has too much of something I need to avoid 44% 41% -3 pts. The foods I eat aren't nutritious enough in general 22% 24% +2 pts. I'm not getting enough of special nutrients I need 19% 22% +3 pts. I have a specific health concern that affects my food choices 18% 18% 0 pts. Source: FMI U.S. Grocery Shopper Trends, Q: How concerned are you about the nutritional content of the foods you eat? n=1,061. Q: You stated that you are somewhat/very concerned about the nutritional content of the foods you eat. Why is that? (select all that apply) n=823. (See Appendix: Tables A.39-41) Those who believe their diets are as healthy as they can be also recognize eating at home as a much healthier option than eating out (see Chart 3.15). Even those consumers with less healthy diets acknowledge that food eaten at home is better for them. Preparing food at home is felt to allow for greater control over ingredients and portions, as well as the kitchen behaviors that ensure food safety. CHART 3.15: CONSUMER PERCEPTION OF FOOD FROM HOME VS. FOOD FROM RESTAURANTS, BY SELF- ASSESSMENT OF AT-HOME EATING 28% 49% 37% 53% 50% 42% 76% 7% 18% 16% 8% 2% 6% 2% 6% It could be A LOT healthier It could be somewhat healthier It is healthy enough It is as healthy as it could possibly be U.S. GROCERY SHOPPER TRENDS 2017 PAGE 47 Food eaten AT HOME much healthier Food eaten AT HOME somewhat healthier Food prepared AWAY FROM HOME somewhat healthier Food prepared AWAY FROM HOME much healthier Shopper diet of food eaten at home Source: FMI U.S. Grocery Shopper Trends, Q: Thinking about the food you prepare at home and the food you eat away from home, which of the following describes how you feel about the food you eat? (Top-2 Box: Food from home is somewhat/much healthier). n=1,061. Q: Thinking of all the foods you eat at home, how would you describe your diet? (Top-2 Box: could be somewhat/a lot healthier). n=1,061. (See Appendix: Tables A.42 & 43)

48 Family meals are undeniably important but hindered by the reality of diverse schedules more than by diverse tastes Each September, the FMI Foundation has been promoting National Family Meals Month, urging households to have one more meal together at home each week. Most households share this aspiration. Nearly two-thirds of U.S. households consider meals at home with family to be very important, and substantially more find it important when there are kids at home. Eighty-five percent of households with kids say that family meals at home are, at minimum, very important (see Appendix: Tables A.70 & 71). Despite the importance of family meals, American households struggle to make them happen. On average, multi-person households are lucky if they share at least one meal a day at home each week. Households with kids share 7.4 meals at home per week compared to 7.6 meals for households without kids. When these family meals do happen, it s typically at dinnertime (see Chart 3.17). About half of households that prioritize eating meals at home together report a hard time overcoming the logistics of differing schedules. Apart from timing, households with kids are especially challenged with distractions, differing tastes and a lack of time and/or cooking skills (see Chart 3.16). Meanwhile, one in five multiperson households, with or without kids at home, says they are often just too tired. CHART 3.16: OBSTACLES TO HAVING DINNER AT HOME WITH FAMILY, BY HOUSEHOLD TYPE Differing schedules Too many distractions get in the way Not enough time to prepare meals Not enough energy/too tired Differing tastes make it challenging Difficulty finding a recipe that everyone likes Going out/ordering in is a treat/indulgency Lack of cooking skills Takes too much time to plan and shop 16% 21% 15% 21% 19% 19% 13% 18% 9% 16% 14% 14% 7% 12% 6% 11% 47% 55% Multi-person HH, NO KIDS Multi-person HH, WITH KIDS Source: FMI U.S. Grocery Shopper Trends, Q: You indicated having more meals together is important to you. What are the biggest obstacles for doing this more often? (Select all that apply). n=351-multi-person HHs with kids; n=476-multiperson HHs no kids. (See Appendix: Tables A.70 & 71) CHART 3.17: AVERAGE WEEKLY MEALS AT HOME WITH FAMILY VS. TOTAL MEALS, BY HOUSEHOLD TYPE Multi-person HH, no kids Multi-person HH, with kids Breakfast 2.0 Breakfast 2.3 Lunch 1.6 Lunch 1.6 Dinner Dinner Meals eaten with family at home Meals eaten without family and/or not at home Skipped meals = 7.6 meals together at home each week = 7.4 meals together at home each week Source: FMI U.S. Grocery Shopper Trends, Q: Thinking about the past week, how many times have you had each of these meals? Q: Who did you have [meal] with? Q: Where did you have [meal]? Shoppers n=1,084. (See Appendix: Table A.69) U.S. GROCERY SHOPPER TRENDS 2017 PAGE 48

49 Meal solutions serve as a patch between schedule constraints and family meals 67 % of households with kids outsource cooking meals to the grocery store, at least some of the time (vs. 44% HHs without kids) As U.S. households struggle to manage complex logistics and time-constrained schedules, meals together at home are often the casualty. Fortunately, U.S. households are finding solutions at their local grocery store. Placing ready-to-eat meal items in strategic store locations allows shoppers another option to compete with the convenience of the drive-thru. Households with kids have had the highest adoption rate to food retailers prepared meal solutions. Two out of every three households with kids purchase prepared meal items at least sometimes (see Chart 3.18). For those who live alone, whether by circumstance or by choice, eating with others at home is an even greater challenge. Family meals often exclude this part of the population. Retailers could be well served to offer solutions that allow adults living alone to participate in and reap the benefits of communal meals. CHART 3.18: FREQUENCY OF PURCHASING PREPARED FOODS FROM GROCERY STORE, BY HOUSEHOLD TYPE How often do you purchase ready-to-eat items such as rotisserie chicken, sandwiches or sushi? 38% 37% 37% 25% 15% 5% 11% 3% 10% Total HHs without kids HHs with kids How often do you purchase heat-and-eat items such as fresh pizza, casseroles or soups? 37% 40% 41% 23% 13% 3% 10% 1% 9% Total HHs without kids HHs with kids Sometimes Often Every time I shop Sometimes Often Every time I shop Source: FMI U.S. Grocery Shopper Trends, Q: When you have decided not to cook, how often do you go to the grocery store specifically to purchase prepared meal items rather than going to a fast food place or restaurant? (Top-3 box: sometimes/often/every time I shop). Q: How often do you purchase the following items from the fresh-food deli either to take home for dinner or eat in the store? Shoppers n=1,084-total; n=730-hhs without kids; n=354-hhs with kids. (See Appendix: Tables A.73-75) Food for Thought: Beyond the dinner occasion, which may begin to be well served by fresh prepared meal solutions from retailers, what opportunities do food stores have to incorporate fresh food into social, family eating? Do produce departments offer consistent solutions for everyday family snacking? For quick-and-easy weekend breakfasts? U.S. GROCERY SHOPPER TRENDS 2017 PAGE 49

50 Appendix: Tables and Methodology The tables found in this Appendix supplement the main charts and figures presented with analysis in the body of the main report. The tables here report results by various demographics and annual trends data. When trended information is available, this year s 2017 results are compared with results found in Overall 2017 results are reported for specific demographic groupings including gender, age cohort, income and primary channel utilized. U.S. GROCERY SHOPPER TRENDS 2017 PAGE 50