NEW YORK — Traditional supermarkets and established CPG brands must overhaul their merchandising strategies to prepare for the generational shift as Millennial shoppers come of age, concludes new research by global investment bank Jeffries and business advisory firm AlixPartners.
The “Trouble in Aisle 5” study indicates that shoppers ages 18 to 31 are 18% less likely to shop at traditional grocery stores and 23% less likely to value food brands in their personal decisions.
While younger consumers are more willing to explore alternative food channels and distribution models, Scott Mushkin, managing director and senior equity research analyst covering food and drug retailing and packaged food at Jeffries, shared his advice for traditional retailers hoping to gain their allegiance.
SN Shopper Marketing Report: The Millennial Shopper
“You want to go fresh — no doubt about it. You want to have a very robust private-label program, particularly private label that speaks to natural and organic and health and wellness trends. You also want online capability like online delivery and to be engaged with smart phones.”
Muschkin also advises that retailers simultaneously shrink Center Store to address the fresh trend, while finding ways to reengage shoppers in the anchor department. He cited Safeway as a best practice example for it's emphasis on fresh private labels and programs like "Just for U", and acknowledged that shelf-stable brands like McCormick are taking the lead as they vie for coveted perimeter space besides complementary fare.
Adjusting to the demographic is imperative since Millennials over 25 will make up roughly 19% of the population by 2020, up from just 5% in 2010, according to the U.S. Census Bureau. The study finds that 25 is the age at which income and household formation typically start to accelerate.
