A Quad Infographic Report

ALL ABOUT GROCERY

SHOPPERS

2

TABLE OF CONTENTS

Overview ..........................................................3

Industry Snapshot ....................................... 4-5

Spending ...................................................... 6-7

Coupon Habits ............................................ 8-9

In-Store Signage Trends ......................... 10-11

Technology .............................................. 12-13

Multicultural Shoppers ........................... 14-16

Future of Grocery Shopping .................. 17-18

Conclusion .....................................................19

3

OVERVIEW

COMPETITION AND CONVENIENCE FOR GROCERY STORE SHOPPING“First we eat, then we do everything else.” Food writer M.F.K. Fisher’s words will always be true, but how Americans shop for food has changed. And you don’t need to be an industry expert to know delivery and mobile are reshaping retail grocery completely.

E-commerce hasn’t hit food stores quite as hard as other brick-and-mortar retailers. But nearly all grocers have pick-up options and are looking for best ways to deliver on-demand fresh food to homes. Many new competitors specialize in this growing service.

Mobile has transformed the in-store experience with things like, 1:1 offers, loyalty programs, self-checkout and personalized digital signage. Software that tracks consumers helps managers optimize store layout, and today’s consumers have higher expectations for what’s on the shelves.

Through it all, though, traditional grocery shopping is healthy across demographics. This report digs into segmentation, trends and what’s next. Then it ends with a way to tie everything together for success.

Because while Ms. Fisher’s sentiment won’t change, today’s shoppers demand convenience — so they have more time to “do everything else.”

4

Industry Snapshot

Even with revenue in the hundreds of billions of dollars, grocers are up against new challenges. Digital deals, organic products and social responsibility change the ways stores operate to make a profit. The sector remains near the top of all retail, though, and those brands who evolve will thrive.

5

MAJOR MARKET SEGMENTATION

GROCERS — SNAPSHOT

Source: IBISWORLD.COM

Source: First Research

GLOBAL MARKET

$2 TRILLION

Source: First Research

U.S. GROCERY MARKET REVENUE $608 BILLION

Source: U.S. Census Bureau, January to December 2018

Grocery is the 2ND LARGEST Retail Sector

Source: U.S. Census Bureau, January to December 2018

US Retail Sales

$5.9 TRILLION

35% Other Foods18.1% Beverages12.8% Dairy Products9.4% Other Non-Food ItemsSource: IBIS 2019

9.1% Fresh and Frozen Meat6.4% Frozen Foods5.5% Drugs and Health Products3.7% Fruit and Vegetables

55 Million Bought Organic Food in Spring 2017

Earnings MORE THAN $70,000–19.1%Earnings EQUAL TO $30,000 to $70,000–36.3%Earnings LESS THAN $30,000–44.6%

TOP 5 CHALLENGES FOR GROCERY INDUSTRY• Organic Trend• Socially Conscious Millennial• Voice Search Surge• Busy Parents• Digital ShoppersSource: Orbital Shift, March 2018

2019 Estimated Grocery Sales Revenue By Products

Source: Orbital Shift, March 2018

6

Spending

Households spent more on food last year than ever before. And, that number will keep going up for both groceries and dining out, across all age demographics. Retailers need to think about price, convenience and the in-store shopping experience to help consumers decide where to spend their money.

7

$109 per week on groceries

spend an average of

Source: Super Market News 2018

3.2

Estimated Online Food and Beverage annually will happen by 2022 or 2024

TOP 5food away from home went up in 2019

GROCERY SHOPPER SPENDING

2.2 TRIPS

to the grocery store each week per household

average

Source: Super Market News 2018

Source: Nielsen 2018

Source: Bureau of Labor Statistics 2019

Source: Bureau of Labor Statistics 2019

$100BILLION

.6%spending went up

in 2019

%

Source: Bureau of Labor Statistics 2017

AVERAGE

ANNUAL FOOD AT HOME SPENDING

$4,363~6%

5%Source: U.S. Department of Agriculture, USA Today 2017

of budget on groceries

of budget on dining out

Decision Factors by Chief Shopper

Source: Quad® 2018 Research Study Chief Shopper n=1,654 Millennials n=558 Gen-X n=448 Boomers n=507 Seniors n=140

Average Americans SpendFood at home

lowest everyday prices 18%

pleasant atmosphere 8%always shop there 6%

friendly employees 6%

close to home 14%

8

Coupon Habits

It’s not just shoppers who benefit from coupons — marketers get valuable data when users redeem offers. And consumers don’t stick to one channel to find the best deals. Whether apps, retail inserts, email or direct mail, coupons convert new customers and give loyal shoppers reasons to buy more.

9

IN-STORE DISPLAY36%

GROCER COUPONS

49%

Ad Insert

56%

DIRECT MAIL

31%email

MOBILE DEVICE

25%

Source: Quad/Graphics Customer Focus® 2018 Research Study Chief Shopper n=1,654 Millennials n=558 Gen-X n=448 Boomers n=507 Seniors n=140

Source: Quad/Graphics Customer Focus® 2018 Research Study *Chief Grocery Shoppers are those who purchase 60% or more of their households’ groceries

27%

Product Packaging

seek coupons from a variety of souces to save both PRINT & DIGITAL 51%

AVOID retail price — wait for sales notice or use coupons 46%

SWITCH BRANDS of products used regularly with a COUPON 37%

use grocery COUPONS REGULARLY or weekly 43%

10

In-Store Signage Trends

Brick-and-mortar grocery stores are creating more welcoming experiences, and spotlighting what customers want. Digital can enhance aisles with augmented reality and dynamic shelf labels. With digital convenience and on-premise savings, the in-store experience is more personal and valuable.

Sale

11

IN-STORE SIGNAGE TRENDS

Experiential environments that are welcoming and

look high-end

Mobile Scan-&-Go CheckoutIn-Store displays drive awareness, adoption, shopping bags and instructions

Source: Chain Store Age, May 2018

Source: Business Insider January 2018

Source: SmartLabel, June 2018

Augmented Reality on signage helps link consumers online and provide product information –Nutritional facts – About 28,000 products

now use SmartLabel

E-Ink Dynamic Electronic Shelf Labels • Allows grocers to

update pricing in real time over the internet

• By 2024 the ESL market is expected to grow more than $1.25 billion

Source: MarketWatch, December 2018

Customer-facing technology like digital signage is a priority for

North American retailers in 2018

1 5in

Source: eMarketer

One additional sign on-premise increases sales revenue by

4.75% on averageSource: visualogistix, March 2016

More than 2/3 of customers say that signage indicates the quality of a business and their productSource: visualogistix, March 2016

In-store advertising drives more sales

70% of the timeSource: visualogistix, March 2016

Global digital signage sales worldwide is forecasted to be worth $33 billion in 2023Source: eMarketer

digital signage advertising spurs customers to make an unplanned purchaseSource: visualogistix, March 2016

1 5in

12

Technology

Mobile has completely changed the in-store experience — checkout, packaging, displays and signage have evolved to take advantage of personal devices. Grocers can use data from apps and other digital behavior to personalize and speed up shopping.

13

GROCERY SHOPPERS & TECHNOLOGY

of U.S. retailers consider

digital devices e.g. signage and magic mirrors, one of the top 10 technologies for 2020

Source: eMarketer

1/3 of millennials have used

a mobile app to engage with a store in the past 12 months

Source: FMI U.S. Grocery Shopper Trends, 2018

51% of shoppers are likely

to scan a QR code or label for information

Source: FMI U.S. Grocery Shopper Trends, 2018

46%either have digital signage/

kiosks in place or are in the upgrade process; and another third have plans to start upgrading in 12–24 months.

Source: eMarketer

1/3

Usage of apps provided by the grocery store rose from 15% in 2017 to 22% in 2018Source: FMI U.S. Grocery Shopper Trends, 2018

Five Tech Trends

Source: https://www.fooddive.com/news/5-tech-trends-that-will-shape-grocery-in-2018/514576/

• Artificial Intelligence• Voice Ordering• Blockchain

• Rapid Checkout• Mobile App Enhancements

Online & Offline Consumer Paths

DESKTOPRESEARCH

IN-STORE BROWSING

THE PRODUCT

PERSONALIZEDREMINDERS

!

PERSONALIZEDEXPERIENCE

MORE PURCHASES

$

$IN-STORE

TECHNOLOGYIN-STORE

BROWSINGMORE

PURCHASES

Source: https://kibocommerce.com/wp-content/uploads/The-State-of-Omnichannel-Commerce.pdf

Source: Quad/Graphics Customer Focus 2018 Research Study

In-Store Mobile Offers Influence Shoppers to… consider a product 31%

try a product 21%purchase a product 19%

buy more of a product 12%

14

Multicultural Shoppers

While all American ethnic groups will grow in the coming years, the Hispanic population will increase the most. Companies should look to these trends to plan their inventory and marketing as buying power shifts a bit more to African-Americans, Asian-Americans and Hispanics.

15

Population Growth by Ethnicity

MULTICULTURAL SHOPPERS

Total White Non-Hispanic

Black

HISPANIC BUYING POWER

$1.7 TRILLION

Source: www.statista.com, 2017

AFRICAN-AMERICAN BUYING POWER

$1.2 TRILLION

Source: Nielsen, February 2018

ASIAN-AMERICAN BUYING POWER

$968 BILLION

Source: NBC News, May 2018

Source: Nielson

+1%

+42% +56% +142% +167%

Asian Hispanic

Combined, African-Americans, Asian-Americans and Hispanics spent an estimated on fresh productsSource: https://www.grocerydive.com/news/grocery--ethnic-shopper-grocery-needs/535501/, 2017

$40 billion

Source: Nielsen: A Fresh Look Into Multicultural Consumers, 2017

Annual Trips per Basket

African-American 51Asian-American 49

Hispanic 49Non-Hispanic White 49

16

MULTICULTURAL SHOPPERS cont.

Source: Nielsen: Asian-American Total Consumer Report, 2016

69%more fresh seafod than the total populaion

72%more fresh vegetables, 23% more frequently than the rest of the population

29%more fresh fruits, 9% more frequently than the total population

On average, Asian-Americans Purchase

79% with someone50% spouse/partner34% children25% another adult21% shop aloneSource: Statista 2018

91% Grocery store80% Mass merchant48% Club store44% Dollar store22% Natural/organic store30% Hispanic/ethnic storeSource: Statista 2018

• Meat (pork and poultry cuts)• Seafood• Greens• Cabbage• Green BeansSource: Statista 2018

Who They Bring to Store–HispanicsWhere They Shop–Hispanics

African-American Brand Loyalty

African-American Shopper Purchases at a Higher Rate

buy based on QUALITY, not price

BRAND they like, they stick to it

gladly SWITCH brands to use coupon

6277

53Source: http://beauthentic.motivateroi.com/buying-power-and-shopping-habits-of-the-african-american-segment

17

Future of Grocery Shopping

Technology is not the only thing changing grocery — new generations prefer and expect different ways to search, prepare and pay for food. Brands will need to change the products themselves in ways the industry has never experienced before.

18

FUTURE OF GROCERY SHOPPING

62%of shoppers agree they want alternatives to traditional, in-store grocery shopping

BUY ONLINE, PICK UP IN STOREOver the next 5 years, 66% of shoppers will use BOPUS more

MEAL KITS27% completely agree they want grocery stores to develop meal kits for purchase in store

DRONE DELIVERYCustomers would want to opt-in for drone delivery

SCAN & GO44% consumers are completely likely to use Scan & Go in the future

VOICE ORDERINGPurchases on Amazon Echo

Grocery Delivery Services21% of shoppers buy 1–5% of their groceries online

All Sources: Field Agent’s May 2017 Survey

household supplies 38packaged foods, snacks 15

ready to eat meals 8beverages 8

hot, ready-to-eat food/meals 56snacks 46

grocery essentials 45cold, ready-to-eat foods/mealscold, ready-to-eat foods/meals

cold, ready-to-eat foods/meals

4139

36

DASH BUTTONS56% would be highly likely to buy fresh groceries for delivery to home

19

CONCLUSION

MARKETING TO THE NEW GROCERY SHOPPERThe way stores sell groceries is changing to a degree we haven’t experienced since refrigeration came on the scene. And while physical and digital retail spaces evolve, marketing channels are ahead of the game. With all the available channels and tactics and the various vendor and agency partners that go along with them, things can be very complex for grocery marketers.

Quad’s integrated offering can help tie any or all of the following services together. We’ll reduce complexity, and increase process efficiencies and marketing spend effectiveness. But most importantly, we’ll help your brand stand out and make your life easier.

• Media Planning• Campaign Planning• Workflow Solutions• Creative Services• Content Production Services• Retail Inserts, Catalogs & Direct Mail• In-Store Signage• Packaging

To find out EXACTLY how we’re helping grocery retailers with everything from strategy through fulfillment, contact Quad today.

© 2019 Quad/Graphics, Inc. All rights reserved. | 2.19 | Job Number | File Name

See how we can help.866.824.2869 Quad.cominfo@quad.com