From the pages of Jim Prevor’s Perishable Pundit
We have been honoured to have John Stanton address our events previously with talks such as these:
So, when Pundit sister publication PRODUCE BUSINESS is running a cover story with a title The Great Retail Explosion of 2017 and Professor Stanton wanted to present on the convulsions going on in the retailing of produce, it was really a no-brainer.
We asked John Aiello, contributing editor at PRODUCE BUSINESS, to find out more.
Dr. John Stanton
Professor and Chairman
Food Marketing Department
Saint Joseph’s University
Philadelphia, Pennsylvania
Q: How long have you been in food marketing and what drew you to this area of study?
A: I have been in food marketing for 42 years. I attended Syracuse University and eventually obtained my PhD. And by chance, as a newly minted PhD, I got the opportunity to do some consulting for Campbell Soup. The project lasted 13 years. I was in a Consumers Insights Group while at Campbell, working on a variety of things.
Q: Your topic in Amsterdam is going to be the changing retail market for produce, and food in general. Can you provide an overview?
A: The point of the presentation will be to show that things have changed so much in retail in the last five years that the traditional method of selling produce to supermarkets and restaurants is now becoming outdated. The reason for this is that everyone is selling food. Dollar Stores and pharmacies are selling produce now. So is the Home Shopping Network.
You have subscription services entering the market as well. I think, even more importantly, Blue Apron is selling meal kits. The typical question I hear about this is: “OK, but how much are they really selling?” Well the answer to that is Blue Apron alone is a billion-dollar business. And Blue Apron sells a lot of produce. And it’s produce that people didn’t go to a supermarket to buy.
Right now, more places than ever are selling food.
Q: It’s obviously opened the door to countless options….
A: Yes! Delivery options. Plus, online shopping venues, which have had a major impact. It’s important to realise that these changes came about because these are the things customers wanted and demanded. Right now, 30% of the households in the United States are single-person households. And this single-person household is having a big impact on the industry.
Q: As are the Millennials…
A: Absolutely. Food suppliers didn’t have to change all that much for the Baby Boomers. But the Millennials are very different. How they shop and what they value is quite different from previous generations.
Q: What are three of the most significant changes to the retail sector?
A: Well, the most significant changes have taken place in the past five years. And the biggest change, as far as I am concerned, is that Millennials are becoming primary shoppers. Millennials use online services routinely and, like I said, they have much different values than my generation had. Things like “sustainability” and “food waste” really mean something to them. The Millennials are happy to pay more for a half of a melon [rather than the whole melon] because they know they’d waste the whole piece of fruit.
The second major change is convenience. Convenience has always been important, but it’s really important now. People want ultra convenience today. This is why subscription services and home delivery options have become so popular. My mother and grandmother would never have given up buying their tomatoes at the store themselves. But today’s consumers are willing to give this up to save more time. Older Millennials are basically saying that the people in the store know more about the process [of picking a good tomato] than they do.
Finally, the third major change is technology. We can do so much now with data analysis, and we have so much more knowledge today. Marketing basically comes down to selling what people want to buy. And technology is helping us do a better job at finding out what people want to buy. Let’s take potatoes as an example. When I was young, there were just a couple kinds of potatoes to buy. But today there are 20 different varieties for sale. People are looking for this variability, and stores can now give it to them through better management systems.
Q: What are the greatest factors that have influenced these changes in the retail schematic?
A: The primary factors are the population change; technology; and changes to the channel of distribution. By this I mean to say that ten years ago, we didn’t have Dollar Stores or pharmacies or online venues selling produce. But now we do.
Q: How has this impacted food safety, if at all?
A: That’s an interesting question. I don’t think food safety has been an issue in terms of the points we have been discussing. You know, there’s always going to be situations with occasional safety issues no matter how hard companies try to be perfect.
But the reality is that the United States has the safest food supply in the world. Yes, there are occasional problems. But some issues also come from the consumers through improper handling of products. Getting back to your question, though – none of the changes I’ve identified have had a direct impact on food safety.
Q: Have these changes in retail protocols been better or worse for the consumer?
A: They have definitely been better because they’ve given people more choices. And these choices have allowed them to choose just what approach they want [to undertake]. If you still want to go to the grocery store, there are obvious alternatives. If you’re so busy that you want to stop at a convenience store to buy food, they are there. And if you want something waiting for you on your doorstep when you get home, you can have that, too. We have so many more choices than we did when I was younger. So, it’s not a little better for the consumer, it is a lot better.
Q: Inflation affects food and produce market price almost immediately. Given this fact, can retailers do anything to hold consumers in place?
A: In my opinion, price has never really been that important. The basic economic theory is that if you give people two choices, all other things being equal, they will pick the cheapest alternative. But as marketers, we’re not trying to give people two equal choices. And there are specific things we can do in terms of what is offered. For example, some stores offer products that are not available elsewhere. There’s this obsession with price, but the most successful grocery store right now is not necessarily the cheapest
You will always have a segment of the population that will go to Aldi and Wal-Mart to save money.
Let’s take eggs as an example: The price of a dozen eggs is basically the same as it was 20 years ago in real dollars. So, I think stores today must be focused on much more than price. They need to focus on knowledge – of the store and its products.
They also need to promote strong customer service. Having knowledgeable people in the store really matters. As does making the store different in some way. But back to your original question: Price is most important only when people have two identical choices from which to choose.
Q: What produce items are most susceptible to price spikes at the retail end of the spectrum?
A: I think that local seasonal products have the most price variation. You can get asparagus all year around, but you will pay more in the off-season. When it’s locally produced, you often can get it at the cheapest price. When produce is imported, it is generally higher to buy. Locally grown crops aren’t usually shipped long distances, so farmers don’t have to worry that products will be damaged, bruised or compromised in the shipping and distribution channel.
Where I live, in New Jersey, you pay a certain price for tomatoes, and they come from all over. But when the Jersey tomatoes come available, they are much less expensive. But this local-is-cheapest trend is not always the case. Sometimes producers realise they can command a higher price for the locally grown item because quality has substantially increased.
Q: Has the increased awareness in diet and the focus on better cardiovascular health practices been a catalyst to the changing landscape of the retail market?
A: No, I don’t believe it has. It all comes back to convenience and the desire for variety. Actually, convenience more than anything. Let’s look at bagged salad as an example. People used to go out and buy a head of lettuce. But somebody finally got the idea to pre-bag it. At first, the industry fought it every step of the way. The question was: “Who is going to pay one-and-a-half to two times the cost for the same product [that’s just been pre-packaged]?”
Again, it comes down to that obsession with price. But for the consumer, it was better – the lettuce lasted longer, with little to no waste. Yet, the industry still fought it all along the way. Today, we have bagged salad, and it comes with dressing and croutons too. You can see the change taking place in society, and it correlates with what’s happened with salad. Today’s college student doesn’t say put lettuce on my sandwich. They say put salad on it. They say that because it’s what they know.
Q: So you think the health considerations are effectually meaningless?
A: With respect to health, telling people to change their behaviour does not work. Some people will listen, but most Americans don’t do this. Most Americans give lip-service and say they are eating healthier, rather than actually doing it.
Q: I understand you’re a member of the European Retail Academy Hall of Fame. Can you tell me a bit about this organisation?
A: It’s a group [made up] of primarily college professors in Europe who focus attention on the retail industry. We get together annually at the time of ANUGA [a general trade and food exhibition]; it’s one of the major food conferences in the world. As I said, we meet to discuss issues and problems in the industry and to collaborate with each other on research.
The basic idea is to share knowledge of retail regardless of sector and to also be able to find the commonality [in the changes taking place]. I actually think I am in the Hall of Fame because I’m the oldest one (laughing)…
Q: In our discussion, you’ve identified several factors that are changing the face of retail as we have known it. But are these changes ultimately going to be good for the country, and for the society as a whole? Are we sacrificing something vital just for the sake of sweet convenience?
A: Well, the existing food industry is looking at the Millennials. And they are so different; they behave so differently. We look at them and ask: “What kind of world is this going to be?” This generation doesn’t shop. They live on their phones.
But it’s actually the same question my dad’s generation asked years ago when they looked at the Hippies. But things turned out fine. And the answer today is going to be the same. We’re going to be alright with these people who are our new consumers. Personally, I don’t understand them. I am totally different. Their work habits are totally different from mine. But I nonetheless have complete faith that they’ll do a good job moving forward.
Q: As we move into the 2020s, where are things going? Do you foresee any other radical changes in the future which will further alter the retail experience for the consumer?
A: Yes, I do. I believe we will see more technology going forward. And I think that each produce item will include a flavour or freshness label that will signal to the consumer just how fresh it is.
I also believe that robots using the equivalent of facial recognition will be involved in locating product on the shelf that does not look fresh. But I also think that some of these efforts at reducing food waste will lead consumers to buy more “less than perfect” fruits and vegetables.
*****
Millennials, Convenience and Technology – the great trinity driving change and, in truth, we have little certainty on which way they are going to drive it!
We know what Millennials say moves them, but how those attitudes will survive the collision with having to save for their kid’s college is completely unclear.
Convenience is king, but what is convenient? Is a 200,000-square-foot store that offers true one-stop shopping convenient, or is an easily navigable 35,000 square foot store that is nearby but also might mean going to other stores to get everything you want? Is home delivery convenient or a drive-through where you can pick up your order?
We’ve run pieces about how young people are transforming the world:
PRODUCE AND GENERATION Z Can We Make Our Pitch Effective In Eight Seconds Or Less?
Now come and join the discussion with one of the world’s pre-eminent food marketing experts, and let’s think through what this all means for produce and for us.
You can check out the website right here.
Register for the event here.
Book a hotel room — where the action is — at the Headquarters Hilton Amsterdam right here.
And if you would like to exhibit or sponsor, please let us know here.
And, of course, we are happy to answer questions right here.
We look forward to seeing you in Amsterdam!
