Demographics make this industry go ‘round… At least, right now they do. Studies always ask: Who’s buying natural and organic? Who’s into sustainable packaging? Who’s doing most of the grocery shopping these days?
One might think that the variables are so numerous that coming up with a singular answer to the “Who” question is impossible. But a look at U.S. demographics reveals there are signposts to follow; namely the two big tides currently lapping at the retail shoreline: The slowly ebbing Baby Boomers (those born 1945-1964) and the rising Millennials (1982-2001).
Both of these populations are extremely attuned to health and wellness. One started the modern movement, the other is carrying it to a higher level. A new report out from Jefferies Group & Alix Partners (sorry no link available) alludes to the tremendous influence these generations have on food retailing in a report that focuses onchallenges. The impact is even more acute right now, since both of these populations are dense and active.
The survey predicts that the number of Boomers will fall below 20% of the U.S. population within the next 8 years. In that same time frame, the number of Millennials over the age of 25 will increase, eventually making up roughly the same percentage. All told, these two groups will make up nearly one half of the shopping public by the year 2020.
The study notes there are vast differences in the way these two camps shop. Boomers prefer going to a brick-and-mortar store with coupons, while Millennials are completely comfortable engaging in different distribution channels to fulfill their needs. The key to satisfying the rising demands of the latter is to cater to their high level of expectation: They want what they want, when they want it. Technological dexterity enables them to engage with retailers on multiple levels, a process that threatens businesses models that have been catering to aisle-wandering Boomers for too long.Luckily, in the area of health and wellness, there’s plenty of love to go around. Both groups are huge consumers of natural, organic and sustainable goods and services.
“A generation that 30 years ago drove a fitness craze, is now turning their attention toward what they put in their bodies as a means of remaining healthy and extending longevity,” the study found. “Fresh and healthy will clearly continue to gain importance, as will products that help with specific dietary needs that result from growing older.”
As for the Millennials and their shopping habits: “Convenience, fresh/healthy, value (this is not always price), variety and natural/organic all seem to be important attributes (at least for now) for this very independent cohort,” researchers wrote.
Though independent of one another, Boomers and Millennials combined are the chief energy behind the latest round of industry growth. What’s key here — as a card-carrying member of Generation X, I feel eminently qualified to speak as a dispassionate observer — is that the growth is long-term and sustainable.
As the spending power of one generation fades, the other’s will grow. And this is no prediction. We’re seeing the dynamics play out right now. The success of retailers like Whole Foods Market and Sprouts Farmers Market, and the IPO plans for Natural Grocers by Vitamin Cottage, all reflect a broad-based appetite.
Manufacturers, too, are benefiting directly from the cross-sectional demand generated by these groups, with recent M&A activity by General Mills, Pfizer and other large companies. There’s even IPO action on this side of the business, with the recent successful public launch of Annie’s Naturals. And there’s more to come.