Grocers to Feel Generational Shift
Posted On July 13, 2012
The generation currently most likely to shop for groceries and cook at home, the Baby Boomers, will be spending less and cooking less. Meanwhile, the Boomers’ demographic replacements, the Millennials, don’t cook at home nearly as much. When they do, they are primarily interested in value (i.e., price) and convenience. That adds up to a tectonic generational shift for the grocery industry, according to a joint study by Jefferies and AlixPartners.
Boomers, currently the leading grocery shoppers, are headed for retirement and fixed incomes and decreased demographic significance. They’ll be spending less when they do grocery shop, they’ll be cooking less, and they’ll be a smaller part of the market than they have been. Their spending at traditional groceries is already in decline
Millennials will replace Boomers as the largest market segment over the next ten years, but they have a vastly different outlook toward cooking and grocery shopping to older generations. They are much less loyal to recognizable brands and chains than Boomers and spend less of their food budget at traditional groceries. They focus on price and convenience. Grocers will have to find margins in added convenience (as opposed to premium brands for Boomers) but must also understand that Millennials will gravitate to the best value, even if it means ordering groceries online. One area of potential growth among Millennials is the natural/organic category, where they are about 30% more likely to spend more than Boomers.