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© ALL R IGHTS RESERVED 2011

FOOD SHOPPING SHIFTS

MARCH 7 , 2011

Here are the trends in food retail that will define the future of the category. These trends will challenge “classic” channels and manufacturers; and embolden others to seize the opportunity.

2 © ALL RIGHTS RESERVED 2011

FOOD AVAILABLE EVERYWHERE IMPACTS SHOPPERS

Q: Have you noticed that food products are sold in more different types of stores today compared to a few years ago? Q: Are you buying food in more stores compared to a few years ago?

FOOD SHOPPING SHIFTS | MARCH, 2011

TOTAL AGE ETHNICITY January

2011 18-34 35-54 55+ Caucasian Hispanic African American

Base: Total Respondents 1504 441 584 479 1006 200 198 A B C D E F G % % % % % % %

% Notice food being sold in more places 77 75 76 80 75 80 82 E

% Buy food in more places 49 59 CD 49 D 41 45 60 E 54 E

Compared to a few years ago, 3/4 are noticing food being sold in more different stores and 1/2 say they are actually buying food in more places -- especially 18-34 year olds and Hispanic Shoppers.

SANDWICHES @ DUANE READE FRESH FOOD @ TARGET

(SEE APPENDIX TABLES 1A)


What shoppers notice (or look for) partially reflects their priorities, but a solid 2/3 like what they see in the food stores they shop.

»! Noticed most heavily by 70%-73% of shoppers was expanded selection of store brands and organic/natural food.

»! 73% notice, and almost all like, the increased visibility of nutritional information.

»! Over half (56%) noticed more specialty food stores opening and 1/3 notice smaller supermarket formats – 2/3 like both.

»! New store services (i.e. reporting the origin of fresh foods and health-ratings) are noticed early by nearly half of shoppers, and ! already find them appealing.

»! Fewer notice improvements in customer service (40%), but everyone (89%) wants a pleasant experience.

SHOPPERS ACT ON THEIR PRIORITIES

Q: Which of the following have you noticed/liked about food stores? FOOD SHOPPING SHIFTS | MARCH, 2011

FOOD RETAILING TRENDS “I’VE

NOTICED THIS”

“I LIKE THIS”

Base: Total Respondents (n=1504)/ Varies by trend noticed % %

Expanded store brand selection in food 73 78

More visible nutritional information 71 86

Expanded selection of organic and natural foods 70 62

Healthier options added by convenience and fast food chains (i.e. fruit, salad) 64 74

More specialty food stores opening (i.e. Whole Foods) 56 63

Stores letting you know where fresh food was grown 49 82

Stores rating foods based on how healthy they are 42 74

More food retailers supporting charitable or community causes 41 80

Customer service in food stores is improving 40 89

More small supermarkets opening 34 69

Registered dietitians in aisles to answer questions 15 63

(SEE APPENDIX TABLES 2A,3A)


DEMO PREFERENCES SHAPE FOOD RETAIL FUTURES


»! More 18-34 year olds already buy food in more places and notice and like smaller supermarket formats.

»! More Hispanic and African American Shoppers already buy food in more places and notice and like dieticians in the aisles – satisfying their hunger for information to make healthier choices.

»! Overall, more Hispanic and African American Shoppers noticed many of the features/services that support healthier eating.

Young, Hispanic and African American Shoppers have unique attitudes and behaviors that will help shape the future of food retail:

KEY DIFFERENCES BY AGE TOTAL 18-34 35-54 55+

A B C D % % % %

% Buying food in more places (n=1504) 49 59 CD 49 D 41

% Noticing smaller supermarkets (n=1504) 34 47 CD 28 28

% Liking expansion of smaller supermarkets (n=511)

69 73 D 69 63

KEY DIFFERENCES BY ETHNICITY

TOTAL CAUC- ASIAN

HISP- ANIC

AFRICAN AMERICAN

A B C D % % % %

% Buying food in more places (n=1504) 49 45 60 B 54 B

% Noticing dietitians in aisles to answer questions (n=1504)

15 11 23 B 24 B

% Liking dietitians in aisles to answer questions (n=226)

63 51 72 B 69 B

(SEE APPENDIX TABLE 2A)

(SEE APPENDIX TABLE 2A)


1.! Who owns food shopping? Many can. If ever you doubted that shoppers will buy anything everywhere, this Food category report proves it. Half of all shoppers feel they are buying food in more places now than they were a year ago. This comes two weeks after the PULSE we published on Gift Cards, which showed the same results – as gift cards are sold in more places, more people buy them.

2.! Transparency will define trust for food retail. Transparency about where the produce is grown and the fish farmed is as important to shoppers today as good service.

3.! Nutrition guidance is a big win, especially with African American and Hispanic Shoppers. Over ! of all shoppers welcome nutrition counseling and guidance in food stores, but it becomes an even bigger opportunity with minority shoppers, who are the majority in many communities.

4.! Small store formats make modest gains. Small formats have been expanding, and 1/3 of shoppers have noticed. Many say they like them, but the size of the store is not as important as the transparency around food and nutrition.

5.! Store brands are popular. In the top 5 things shoppers have noticed, and like, is the expansion of retailers’ brands.

INSIGHTS TO ACTIVATE


TO T H E S M A R T E X A M P L E S

Here are the trends in food retail that will define the future of the category. These trends will challenge “classic” channels and manufacturers, and embolden others to seize the opportunity.


»! Kroger’s private label produce, Fresh Selections, comes packaged with a 16-digit code so shoppers can trace the product’s origin, learn how it was grown, and where. These details can be accessed in-store with the HarvestMark mobile app, or on harvestmark.com.

SMART EXAMPLES: KROGER & GIANT EAGLE

HOW AMERICA SHOPS® SMART MOVES & GOTTA SEE | 1Q 2011

»! Giant Eagle’s Market District format offers an in-store nutritionist to help guide purchase decisions. It further supports healthy nutrition by offering a variety of free educational events such as “Tour of the Store” where shoppers can learn how to read food labels, shop for soy or Gluten free products.

TO T H E A P P E N D I X TA B L E S


APPENDIX TABLES TABLE 1 REACTIONS TO FOOD AVAILABLE EVERYWHERE »! A: By Demographics

»! B: By Retailer Shoppers

TABLE 2 FOOD RETAILING TRENDS (NOTICED) »! A: By Demographics »! B: By Retailer Shoppers

TABLE 3 FOOD RETAILING TRENDS (LIKED) »! A: By Demographics Only



TOTAL GENDER AGE INCOME ETHNICITY January

2011 Men Women 18-34 35-54 55+ <$50K $50k- $99K $100K+ Caucasian Hispanic African

American Base: Total Respondents 1504 739 765 441 584 479 722 566 216 1006 200 198

A B C D E F G H I J K L % % % % % % % % % % % %

% Notice food being sold in more places 77 73 81B 75 76 80 78 75 77 75 80 82 J

% Buy food in more places compared to a few years ago 49 46 53 B 59 EF 49F 41 49 49 52 45 60 J 54 J

TABLE 1A: REACTIONS TO FOOD AVAILABLE EVERYWHERE

Q: Have you noticed that food products are sold in more different types of stores today compared to a few years ago? How America Shops® The PULSE of Shopping Life is based on national survey conducted in January 2011

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TOTAL IN THE PAST WEEK IN THE PAST 3 MONTHS

MASS MERCH. DRUG STORE WAREHOUSE CLUB DOLLAR STORE SUPERMARKET ONLINE DEPARTMENT STORE

Total WMT TGT Total CVS WG Rite Aid Total Costco Sam’s Total Dollar

Gen. Family Dollar Total Kroger Safe-

way Publix Albert-son’s Total Total JCP Macy’s Kohl’s

Base: Total Respondents 1504 949 766 379 1079 182 272 90 574 166 216 907 142 105 1132 311 164 152 147 940 874 110 101 162

A B C D E F G H I J K L M N O P Q R S T U V W X

% % % % % % % % % % % % % % % % % % % % % % % %

% Notice food being sold in more places

77 79 80 78 79 75 81 76 81 78 83 81 OT 80 82 78 82 83 80 81 77 82

OT 87 78 82

% Buy food in more places compared to a few years ago

49 55 O 56 61 52 G 46 45 51 54 56 49 56 OT 48 49 50 52 65

OP 57 58 51 55 O 52 46 47

TABLE 1B: REACTIONS TO FOOD AVAILABLE EVERYWHERE

Q: Have you noticed that food products are sold in more different types of stores today compared to a few years ago? How America Shops® The PULSE of Shopping Life is based on national survey conducted in January 2011

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TOTAL GENDER AGE INCOME ETHNICITY January

2011 Men Women 18-34 35-54 55+ <$50K $50k- $99K $100K+ Caucasian Hispanic African

American Base: Total Respondents 1504 739 765 441 584 479 722 566 216 1006 200 198

A B C D E F G H I J K L % % % % % % % % % % % %

Expanded store brand selection in food 73 70 76 B 66 74 D 78 D 73 74 70 75 K 67 72

More visible nutritional information 71 68 74 B 65 69 78 DE 72 69 73 69 76 75

Expanded selection of organic and natural foods 70 66 74 B 68 69 73 68 71 73 69 70 72

Healthier options added by convenience and fast food chains (i.e. fruit, salad)

64 61 68 B 66 64 64 66I 66I 56 63 64 74 JK

More specialty food stores opening (i.e. Whole Foods) 56 53 58 64 EF 52 52 55 54 62 51 62 J 70 J

Stores letting you know where fresh food was grown 49 48 50 52 46 48 48 49 50 47 52 50

Stores rating foods based on how healthy they are 42 43 40 47 EF 38 41 43 40 42 38 48 J 51 J

More food retailers supporting charitable or community causes 41 39 42 51 EF 37 36 41 40 43 36 54 J 46 J

Customer service in food stores is improving 40 41 39 43 E 36 43 E 43 H 37 39 35 50 J 53 J

More small supermarkets opening 34 36 32 47 EF 28 28 36 H 31 34 27 42 J 53 JK

Registered dietitians in aisles to answer questions 15 18C 13 26 EF 12 10 16 14 18 11 23 J 24 J

TABLE 2A: FOOD RETAIL ING TRENDS (NOTICED)

Q: Which of the following have you noticed about food stores? How America Shops® The PULSE of Shopping Life is based on national survey conducted in January 2011

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TOTAL IN THE PAST WEEK IN THE PAST 3 MONTHS

MASS MERCH. DRUG STORE WAREHOUSE CLUB DOLLAR STORE SUPERMARKET ONLINE DEPARTMENT STORE

Total WMT TGT Total CVS WG Rite Aid Total Costco Sam’s Total Dollar

Gen. Family Dollar Total Kroger Safe-

way Publix Albert-son’s Total Total JCP Macy’s Kohl’s

Base: Total Respondents 1504 949 766 379 1079 182 272 90 574 166 216 907 142 105 1132 311 164 152 147 940 874 110 101 162 A B C D E F G H I J K L M N O P Q R S T U V W X % % % % % % % % % % % % % % % % % % % % % % % %

Expanded store brand selection in food 73 78 77 77 75 70 78F 71 78 76 80 76 77 70 76 78 76 76 75 75 76 80 78 82

More visible nutritional information 71 73 74 75 73 69 73 68 74 68 73 73 65 76 73 77 73 69 76 72 73 72 74 70

Expanded selection of organic and natural foods

70 74 73 79 C 74 71 69 72 76 79 75 73 69 66 74 74 76 79 76 73 76 74 84 X 70

Healthier options added by convenience and fast food chains (i.e. fruit, salad)

64 69 68 69 68 62 67 72 66 65 67 69 65 70 67 68 64 64 60 66 69 76 66 66

More specialty food stores opening (i.e. Whole Foods)

56 59 58 66 BC 59 H 54 56 47 61 62 56 56 51 58 58 60 63 62 64 56 60 58 69 59

Stores letting you know where fresh food was grown

49 49 50 49 49 43 46 49 52 48 49 50 51 43 50 53 52 53 56 50 53 55 52 52

Stores rating foods based on how healthy they are

42 42 42 41 42 38 42 42 44 37 44 44 45 50 41 42 41 42 45 41 41 43 39 43

More food retailers supporting charitable or community causes

41 42 42 46 41 35 43 34 42 36 40 42 40 48 41 43 43 47 44 40 43 37 43 39

Customer service in food stores is improving 40 41 42 41 40 36 38 44 40 36 40 42 44 34 39 43 45 45 48 O 39 41 46 46 39

More small supermarkets opening 34 33 33 38 33 32 31 33 35 31 33 34 36 34 32 37 37 37 39 33 33 33 34 27

Registered dietitians in aisles to answer questions

15 14 15 19 B 14 10 11 10 14 10 13 16 12 17 13 16 19 19 25 OP 14 15 X 18 X 16 9

TABLE 2B: FOOD RETAIL ING TRENDS (NOTICED)

Q: Which of the following have you noticed about food stores? How America Shops® The PULSE of Shopping Life is based on national survey conducted in January 2011

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TOTAL GENDER AGE INCOME ETHNICITY

January 2011 Men Women 18-34 35-54 55+ <$50K $50k-

$99K $100K+ Caucasian Hispanic African American

Base: Total Respondents 1504 739 765 441 584 479 722 566 216 1006 200 198 A B C D E F G H I J K L % % % % % % % % % % % %

Customer service in food stores is improving (n=602) 89 86 92 B 80 90 D 95 DE 87 91 89 89 K 81 92 K

More visible nutritional information (n=1067) 86 80 90 B 77 86 D 92 DE 82 88 G 90 G 86 83 90

Stores letting you know where fresh food was grown (n=737) 82 79 84 72 82 D 90 DE 81 80 87 81 79 85

More food retailers supporting charitable or community causes (n=617)

80 73 85 B 73 84 D 83 D 78 83 74 78 79 85

Expanded store brand selection in food (private labels) (n=1097) 78 78 79 78 78 78 79 78 76 78 79 85

Convenience stores and fast food chains offering healthy options (i.e. fruit, salad) (n=963)

74 67 80 B 69 73 78 D 74 73 75 71 80J 79 J

Stores rating foods based on how healthy they are (n=631) 74 71 77 64 77 D 81 D 72 75 77 73 74 76

More small supermarkets opening (n=511) 69 68 71 73 F 69 63 66 71 77 66 73 71

More specialty food stores opening (i.e. Whole Foods) (n=842)

63 60 67 B 63 66 61 62 64 68 59 66 73 J

Registered dietitians in aisles to answer questions (n=226) 63 61 67 57 68 72 59 65 74 51 72 J 69 J

Expanded selection of organic and natural foods (n=1053) 62 56 66 B 64 61 61 60 63 64 56 69 J 72 J

TABLE 3A: FOOD RETAIL ING TRENDS (L IKED)

Q: Of the trends in food retailing that you noticed, which do you like? How America Shops® The PULSE of Shopping Life is based on national survey conducted in January 2011

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307 SEVENTH AVENUE SUITE 1707

NEW YORK NY 10001

P 212.924.7780 | F 212.924.7608 | E [email protected]

© W S L M A R K E T I N G I N C . A L L R I G H T S R E S E R V E D 2 0 11

CONTACT PAUL MENICHELLI @ [email protected] FOR QUESTIONS OR ADDITIONAL INFORMATION ABOUT THIS RESEARCH

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