Groceries are on Millennials’ Holiday Shopping List

Stephen DeAngelis

November 26, 2018

When it comes to holiday shopping, most people immediately think of gifts and decorations. But what would the holidays be without special meals and festive parties? Enjoying food throughout the holiday season is one tradition that has successfully passed from generation to generation. The latest generation celebrating this tradition is Generation Y (aka millennials — people born between 1977–1994) whose members are also the current darlings of marketers. Jacqueline Renfrow reports members of Generation Y are ready to spend big on groceries this holiday season. She writes, “Millennials are expected to be the biggest spenders this holiday shopping season, according to Accenture’s annual holiday shopping survey. … Specific to grocery, 86% of those surveyed said quality is ‘important’ or ‘very important’ when making holiday food shopping decisions. More than half say they are likely to shop from a high-quality retailer and 48% are likely to buy premium brands instead of private labels. More than 80% of respondents ranked ‘trust in the provider and products’ as a top-three deciding factor, followed by range of items at 78%, and convenience of the physical store at 69%.”[1] Generation Y is a transitional generation with its oldest members pushing 40 and its youngest members in their mid-twenties. When it comes to grocery shopping, the age differential means older millennials are generally shopping for families while younger millennials are most often shopping for themselves and friends. Grocers need to keep this in mind when reaching out to members of this critical shopper segment.

Connecting with millennial grocery shoppers

The holidays are a particularly good time to connect with millennials. Renfrow reports, “Millennials are quickly becoming the strongest spenders in the grocery segment. These younger shoppers are now the largest generational demographic in the U.S., and they spend a larger percentage of their food budgets on prepared foods than other age groups — meaning grocers have a big opportunity to capitalize on creating catered and prepared meals for larger crowds.” It’s party time! Over the past few years, millennials have consistently been the segment spending most on groceries. Sandy Skrovan (@SandySkrovan) explains, “Millennials are either already in or are rapidly moving into the family life stage. This is great news for grocers since it means more mouths to feed, both now and for years to come. … At the same time, younger millennials are graduating college, beginning their careers, and starting to think about marriage and families of their own — which again means more spending on groceries.”[2]

Just because millennials are buying more groceries, it doesn’t mean they want the same things their parents wanted. Jeff Wells (@JeffWellsWH) reports, “Consumer food preferences, led by millennials, are rapidly evolving and presenting a host opportunities as well as challenges to manufacturers. … Just about every company in the food industry is eager to please millennial shoppers. But in many instances, the harder retailers and manufacturers try to appeal to this coveted demographic, the more elusive these shoppers become.”[3] Sylvain Perrier adds, “In any industry, knowing your audience is the key to success. This is especially true when it comes to today’s grocery retail landscape.”[4]

What millennials want from their grocery shopping experience

There are a number of ways to get to know millennial shoppers better. Loyalty programs and other consumer data are a great place to start. Perrier notes, “Knowing customer behavior is essential to shaping the shopping experience. For example, do your shoppers use coupons? According to Valassis, 84% of shoppers say that coupons influence where they shop. As such, if your shoppers embrace coupons, make them more prevalent in the store and online to keep them shopping at your store and to attract additional customers.” There are also no shortage of surveys claiming to know millennial preferences. Some of those preferences are:

  • Transparency. Millennials have repeatedly demonstrated a greater social consciousness than preceding generations. As a result, Renfrow explains, “In a 2015 Nielsen survey, 66% of millennials said they were willing to pay more for sustainable products. So grocers should be looking to push items that are grown sustainably, as well as those produced locally to support the community. Transparency also means a focus on real foods with few additives, if any. Retailers can play up any of these attributes by including in-store campaigns promoting technology such as QR codes for consumers to get additional information. In fact, a recent Food Marketing Institute study found that 72% of millennials indicated they were ‘somewhat to very likely’ to scan a QR code to view more specific product details.”
  • Quality. Renfrow reports, “This generation values quality as well as transparency about where their food originated.” Quality is often associated with “locally grown” produce. Wells explains, “Locally grown foods are still going strong, with research firm Packaged Facts estimating the market will hit $20 billion by next year. Grocers have tapped into demand by increasing their assortment, promoting their local producers and holding ‘meet the farmer’ style events in stores. Some grocers are taking local a step further by partnering with vertical farming operations like Bright Farms and Gotham Greens to source produce from mere miles away.”[5]
  • Value. Skrovan reports research from First Insight found, “A higher share of millennials (71%) shop multiple stores seeking deals compared with baby boomers (57%). This goes against conventional wisdom that boomers would be more interested in finding bargains in-store.”[6] This bodes well for grocers offering in-store coupons for loyal shoppers.
  • Service. Millennials like spending money on experiences and they are more likely to shop in stores providing them with a personalized and pleasant experience. As a result, stores are now providing full service counters in several departments as well as in-store dining and demonstrations. As Wells explains, “From stock-up trips to quick in-and-out shops, consumers typically treat the grocery store as a transitory destination. But retailers know there’s also value to getting shoppers to slow down and spend more time inside their four walls.”
  • Omnichannel. Kelli Windsor (@kelli916), Director of Digital Communications, and Melaina Lewis, Manager of Communications at the Food Marketing Institute, report, “43% of all Millennials report occasionally or fairly often shopping for groceries online. For Millennials with children, this figure jumps to 58%.”[7] Perrier adds, “As new fulfillment options continue to garner popularity, retailers must figure out which ones will best fit their shoppers’ needs. One thing to consider is geography — how close are your shoppers to your store? If you’re in a metropolitan area, click and collect can be great for on-the-go customers nearby. However, if your shoppers are further away, such as in a rural setting, ship to home may be the more convenient option.”

Concluding thoughts

In order to reach millennial grocery shoppers, retailers need to understand their food and buying preferences and personalize the consumer shopping experience. Skrovan explains, “It’s increasingly paramount for retailers and brands to gather shopper data and information that enables them to segment their customers and identify differences in purchase patterns and buying behavior. The tools and technology exist today that enables companies to conduct this kind of analysis down to the individual shopper level. Understanding consumer preferences and expectations can help retailers and brands create personalized experiences for their customers, a necessity in today’s ultra-competitive marketplace.” Cognitive computing systems are ideal platforms for conducting the type of analysis recommended by Skrovan and for generating insights that can help make the holiday season a success for grocers.

Footnotes
[1] Jacqueline Renfrow, “Survey: Millennials will spend big on holiday groceries,” Grocery Dive, 9 October 2018.
[2] Sandy Skrovan, “Millennials spend more on groceries than older generations,” Food Dive, 24 July 2017.
[3] Jeff Wells, “Can food companies keep pace with millennials’ preferences?Food Dive, 5 April 2017.
[4] Sylvain Perrier, “Knowing your audience is key to grocers’ success,” Food Dive, 20 August 2018.
[5] Jeff Wells, “5 ways grocers are elevating the store experience,” Food Dive, 17 September 2018.
[6] Sandy Skrovan, “Study: More millennials than boomers look for deals in-store,” Food Dive, 27 September 2017.
[7] Kelli Windsor and Melaina Lewis, “Kids or No Kids: How Millennials Are Grocery Shopping,” Food Marketing Institute, 4 September 2018.