Skip navigation


It's no game: Approximately 10,000 new products entered the U.S. supermarket industry last year, and every retailer knows that only a select few make it. When dealing with consumers, nothing is a sure bet.But there are several umbrella megatrends that can help guide operators and their vendors in trying to execute their role as a destination. Among those uncovered by SN, and cited by retailers themselves

It's no game: Approximately 10,000 new products entered the U.S. supermarket industry last year, and every retailer knows that only a select few make it. When dealing with consumers, nothing is a sure bet.

But there are several umbrella megatrends that can help guide operators and their vendors in trying to execute their role as a destination. Among those uncovered by SN, and cited by retailers themselves and industry experts, are convenience, more sophisticated flavors and a decided turn toward empowerment of the self.

In this world, retailers help consumers simplify their lives by selling products that save more than just "time"; they offer foods that reflect the globalization of the cities, towns and neighborhoods in which they operate; and they adapt their merchandising mix to affirm the consumer's growing belief that personal wellness extends far beyond the health and beauty care aisle.

FRESH MARKET: Convenience Drives Innovation

Freshness and convenience don't always go together as easily as peanut butter and jelly. The freshest items are often those sold closest to their natural state -- think primal cuts of raw beef or whole watermelon. As such, they run a greater risk of becoming irrelevant to a consumer mind-set that continually looks to cut corners in the effort to save time.

Thankfully, retailers and their suppliers have gotten the message loud and clear, and today's supermarkets are finding ways to make freshness and convenience work, with a new generation of products that fulfill consumers' desires for ease-of-preparation while protecting fresh foods' wholesomeness and natural flavor. Produce, in particular, lays claim to one important innovation, retailers said.

"The most successful attempt to make produce more convenient has been bagged salads," said Jeff Lowrance, corporate communications manager, Food Lion, Salisbury, N.C. "These products continue to sell well, and are attracting more consumers all the time. Bagged mixes including broccoli and cauliflower, and bags of sliced carrots, have generated consumer interest."

Similar innovations in other departments have changed the way people shop. In the deli case, there are self-service hot soups and fresh pre-made sandwiches. In meat, there are marinated kabobs and branded, pre-cooked entrees. These all mark new territory in the supermarket industry's battle for stomach share.

"Our current issue is reporting on what's important to [consumers] as opposed to three years ago. Right at the top of the list is this huge idea of purchasing products that are easy to use," said Mona Doyle, president of The Consumer Network, the Philadelphia-based grassroots consumer-issues group and publisher of a regular newsletter.

"More than 50% of older and younger respondents said ease-of-use is the big thing to them now," she told SN. "Only two things were bigger than that, and those were terrorism and the economy."

To be sure, supermarkets are offering convenience in many ways, and freshness is protected through various means. Products, packaging and format play lead roles in influencing how shoppers buy their convenience foods, and where they do it.

According to "Battle of the Brands," a study published by Thomas Opinion Research, Woodbridge, Va., 71% of respondents stated it was important for supermarket service delis to carry prepared foods; 55% said it was important to carry heat-and-serve foods; and 49% said it was important to offer ready-to-cook items in the deli. The statistics are printed in the 2004 edition of "What's In Store," the annual yearbook published by the International Dairy-Deli-Bakery Association, the Madison, Wis.-based organization that commissioned the study.

The emphasis on convenience, in all its guises, is being carried over to pre-made deli salads and single-serve desserts, as well as pre-made sandwiches and packaged cold cuts. A large portion of these items is found in the self-service area of the deli, which has emerged as a centerpiece in the drive for fresh-foods convenience. Here, retailers are predicting increased sales from this corner of their department. Some 60% of operators polled in the "Battle of the Brands" study said they believe that, within the next two years, up to one-half of their total deli department sales will come from self-service (up from 51% of retailers last year).

NONFOOD STRATEGIES: Whole Health, Total Store

For consumers, the health and wellness trend is all about the journey toward a healthier lifestyle, not the destination. For retailers, it's the destination that counts, and supermarkets are stocking up on the latest wellness products to cater to consumers' evolving health concerns.

A few short years from now, the fast-moving whole health movement will surpass today's momentum of pharmacy-related, in-store health screenings, consultations, store tours and dietary supplement offerings -- and the wellness trend will extend itself more aggressively to the entire grocery store product assortment, said retailers and analysts.

"Whole health won't be so categorized," said Laurie Demeritt, president and chief operating officer, The Hartman Group, Bellevue, Wash. "It will become more part of the norm and less of an afterthought from the retailers' point of view."

As consumers sample health and wellness products by category, they will evolve into more sophistication and adopt more products. As a result, retailers will have the opportunity to produce a "halo effect" that can extend from the pharmacy to the soy milk section.

Kowalski's, Woodbury, Minn., boasts a veritable smorgasbord of informative resources on whole health and wellness, including educational shelf signage on good-for-you products throughout the store and ongoing yoga classes in one store, said Debbie Leland, natural and specialty foods buyer. "Our customers are looking more and more to our food stores for wellness information," she said. "They're expecting help, either from printed materials or through staff."

It's an opportunity for retailers to differentiate themselves since many big-box stores are not catering to consumers' specific health concerns, she said.

Among the star players in health and wellness today are organic foods across all categories, natural cleaning products, and natural beauty care products, Leland said.

"Natural health and beauty care products are growing by leaps and bounds because of allergenic risks and a desire to introduce less unnatural substances into the environment," said Jim Wisner, president, Wisner Retail Marketing, Libertyville, Ill.

While the focal point of the health and wellness concept may center on the pharmacist -- traditionally the go-to person in such matters -- the entire health care issue goes well beyond the dispensing of drugs, he said.

"It really revolves around diet and the rest of the store, aside from prescription drugs," he said. "In terms of [the relationship between] pharmacists and understanding the implications of disease management, consumer awareness will become broader."

It's all the more reason for retailers to broaden the availability of health-related information throughout the rest of the store, even though the pharmacy remains the starting point on the consumer's journey, experts said.

A pharmacist's recommendation "carries a huge amount of weight," said Al Jones, senior vice president, procurement and merchandising, Imperial Distributors, Auburn, Mass. The pharmacist is a "key person" in selling health and beauty care, in addition to diet, nutrition and vitamins, he said.

"If they're able to counsel and spend time with the consumer, they can sell tremendous amounts of products," Jones noted.

The surge in popularity for nutrition and diet-related products like Slim-Fast, the Atkins low-carbohydrate diet, and the Zone diet will continue to grow as consumers become more aware of what foods they eat and the health implications of those foods, said analysts. The media scrutiny of the nation's obesity problem and the U.S. Food and Drug Administration's mandate that packaged foods will have to list their trans-fat content by January 2006 will have a major impact on health and wellness going forward, analysts said.

"The majority of the energy in the industry is focused on obesity," said Bill Bishop, president, Willard Bishop Consulting, Barrington, Ill. "Clearly, a tremendous amount of dust has been stirred up by obesity."

Many manufacturers, like Kraft, are already working to reformulate their products. Additionally, Whole Foods Market recently announced that its stores no longer would carry any products containing trans fat.

"What we're seeing is an entire reformulation of mainstream products," Wisner said.

Diabetes care is an outgrowth of the obesity problem, added Wisner. As more people become diagnosed with this disease, diabetes care products will grow in retailers' product mixes. In addition, subcategories like foot care will increase as diabetes brings the onset of foot problems, he said.

"Glucose monitors, test strips and foot care are a growing part of the business," he said.

Roughly 17 million people are living with diabetes, according to the National Diabetes Information Clearinghouse, Bethesda Md., and approximately one million new cases are diagnosed each year for people 20 years old and older.

The landscape for the health and wellness trend continues to evolve, and retailers must adjust to consumers' demands, said analysts.

"Integrating whole health throughout the store is the best way to get consumers to buy these products, and consumers view the retailer as a solutions provider," said Demeritt.

"[Health and wellness] is going to increase and grow," said Leland. "We have to take responsibility [for] our health, and the buck stops at what we put in our mouths."


Convenience For Dinner

A study by NPD Group found that 1 in every 4 main dishes served for dinner is either frozen or considered "ready-to-eat" by U.S. consumers:

Frozen entrees

1993: 12%

2002: 15%

Ready-to-eat entrees

1993: 9%

2002: 11%

SOURCE: "17th Annual Report on Eating Patterns in America," The NPD Group/NPD Foodworld

Consumers Want Help!

Making Nutrition & Health Information Available to Shoppers...

Information is the biggest performance gap of any item in the store.


Importance in Ideal Store: 83%

Performance My Store: 36%

Source: FMI/Rodale Shopping for Health, 2002.

CENTER STORE: One Flavor, Many Spices

In some center aisles, consumers are feeling hot, hot, hot. In yet others, they are experiencing the "wow" of ingredients blended together. New products going to supermarkets often start with taste, and consumer packaged goods manufacturers are rising to the challenge of fueling the desire for bolder, higher-profile flavors in a multitude of products.

Take spices, for example. According to the American Spice Trade Association, Washington, consumption of the "nippier" spices has grown steadily over the years. Since the 1980s, the use of black and white pepper has risen 55%, pounds of mustard seed consumed are up 76%, and one of the hottest categories -- red pepper -- has seen consumption grow 85%.

The increases have helped propel a secondary trend of combining spices for a more sophisticated flavor. The popularity of cooking shows on television has helped the U.S. palate mature, and has prompted manufacturers to develop one of the largest growth areas in the spice category, according to Jason Stemm, spokesman for the ASTA.

"The spice producers have taken it upon themselves to combine some of these flavors from the different ethnic profiles, whether it be like a Caribbean jerk or a Thai seasoning. They are getting even very far beyond that now," Stemm said.

Not only do these blends tickle the taste buds, they are economical for the consumer who can get the same fruitful mix in one $7 bottle that they would have to mix themselves after buying several individual spices, Stemm added.

Snack foods is another area in which flavor combinations have sparked new product development. While the plain potato chip is still a mainstay in many cupboards in the United States, shoppers are also seeking more sophisticated flavors to satisfy their munchies.

"Instead of just cheese flavor, we've got Parmesan and Garlic. We want more specific, authentic flavors," Ann Przybyla Wilkes, vice president of communications at the Snack Food Association, Alexandria, Va., told SN. "Ten years ago, you just had barbecue. Now, you've got Sweet and Sassy, Applewood Chip... it's gotten very specific."

The time crunch many consumers face also lends itself to the production of these new multi-flavored nuggets.

"Are we taking time to dip our chips? We're eating them more on the run, so we want the flavor already in them," Przybyla Wilkes said.

Too, the cyclical nature of the snacking business ensures that manufacturers need to continually create new products that meet the flavor demands of the day, she added. "Potato chips are meant to change flavors every so often. People who eat chips are often adventure seekers; they want fun things. What's popular today may not be popular in two years. You could have the top-selling flavor today, but if you don't change it or update it, in two years it's not going to be the top-selling one."

Regional preferences are not to be ignored, industry observers said. Some manufacturers, like Frito-Lay, have decided to bring flavors that are common to certain geographies to nationwide consumers. Every six months, Frito-Lay presents two new "Tastes of America" potato chip items derived from a certain region, such as the current Chicago Steakhouse Loaded Baked Potato and Monterey Pepper Jack. Obeying the cycle of consumer interest, each new flavor is only available for a limited time.

"Everyone wants their favorite flavors," said Przybyla Wilkes.


A Taste for Retail

Manufacturers are doing their part to fulfill the demand for special flavors. Wholesalers like Bozzuto's, Chesire, Conn., are also joining the effort.

Recognizing the opportunities that exist in developing incremental sales and profits for retail customers, the billion-dollar wholesaler has created a specialty foods division specifically to take advantage of this market trend.

"Success in retailing specialty foods requires a particularly in-depth understanding of the consumer base," said Tom Beadle, general manager of Bozzuto's new specialty foods division. "It also requires the support of dedicated buyers and merchandisers to identify and procure the right products at the right price, which is what Bozzuto's can now offer its customers."

Prior to joining Bozzuto's, Beadle managed specialty food programs for Fleming Cos., Tree of Life and Mutual Biscuit Co.