What Comes Next After ‘The Most Important Year Ever in Grocery?’

Mindfulness among consumers’ heightened attitudes about food, beverages, brands and retailers; multi-sensory tactile experiences; farming and agriculture; the contentious political climate; and the future of food retailing are among the top 10 trends forecasted for 2018 by Phil Lempert. Known as The Supermarket Guru, Lempert presented his annual trend report during an interactive webcast, which took an in-depth look at the factors he foresees as having the largest influence on grocers, brand leaders and consumers in the year ahead.

Describing 2017 as “the most important year ever in grocery,” Lempert set the tone of his presentation by noting the “incredible speed” at which the food world is evolving, and which is in turn commanding a new level of attention unheard of in days gone by.

“Grocery is now ‘cool’ and is attracting talent from the best schools and companies that would have not even thought about grocery or food a few years ago,” he said, pointing to retailers like Hy-Vee, which “have created new environments, both physically and intellectually.” Lempert also tipped his hat to innovative CPG companies which are creating “incubators that attract start-ups to help their brands understand how to become relevant to a new kind of consumer and offer innovations they’ve never dreamed about.”

Related:The Lempert Report's 2018 Trends Webinar Set for Dec. 13

The spate of developments over the past 20 months have given rise to “a new food world” in which 17 CEOs of large food companies have departed – “some voluntarily, others not so” – and have been replaced with “fresh thinking executives. The new retail model must be built around the consumer; built with the foundation that someone else thought through the way people want to acquire foods; and create an environment that empowers consumers, makes their lives easier, healthier and more enjoyable,” be in bricks and mortar, online or both.

“These are very poignant times in the food world,” said Lempert, who urged his audience to “have a unique curiosity to remain open to what can be” in the coming 12 months. “All of us are anxious—we don’t know what’s coming next—but if we shift that anxiety into shared anticipation,” the outlook can become even more promising, he said.

With grocery purchases representing 12.6% of an average household income, Lempert said the issues outlined in this year’s forecast are important because they’re long-range trends vs. short-term fads that he believes will “absolutely change how we market and sell foods.

“Taste, education, excitement and empowerment—these are the four things every supermarket should stand for today,” he affirmed.

Excerpts of Phil Lempert’s 2018 Top Trends follow below:

1. Mindfulness

“The new 2018 food world definition of mindfulness, which I will describe as simply ‘the quality or state of being conscious or aware,’...is a huge step forward for the food industry and for consumers,” he said. Mindfulness reflects a new consumer attitude mostly led by millennials to truly understand everything they can about a particular food or beverage, and then supporting the company, whether it be a brand or retailer, by aligning with their values, and supporting them with their purchases.

“Retailers like CVS are executing on point with in-store executions like ‘snacks that give back’ and the hospitality business is promoting ‘vegetarian vacations’ built not only on the foods they serve but also detailing how their facilities and business practices align with the holistic values of a vegetarian consumer. On Monday, a McDonald's in Bethesda, Md. became the first McDonald's to become ‘a certified green restaurant.’

“Major brands like Honda and Subaru run ad campaigns designed to help others and new startups like FoodMaven, that attracted Walter Robb ex-CEO of Whole Foods as an active investor, is working to recapture the food that is lost in the system to prevent waste; and then selling it to foodservice at a huge discount.

The new leaders of food are driven by a new set of corporate values: social conscience, health and wellness, enhanced nutrition and life hacking…and yes, they do want to make money, big money.”

2. Tactile

“If I had to point to one trend that I believe will have the biggest impact on our industry, it is tactile. The sense of touch. Think about just how food is so tactile; there is probably no profession that is more tactile than being a chef. Multi-sensory is the new secret weapon for food both in products, their packaging and in-store.

“Over the past year or so we saw the first step in visuals including unicorn colored foods and black foods; now the connection moves deeper. Autonomous Sensory Meridian Response – or ASMR – has created a new food media world, where acoustic sounds like slurping, chewing, whispering and the crinkling of packaging trigger a food euphoria. A tingling down the back of our necks.

“Poke bowls, and its many start up franchises, are popping up everywhere offering a variety of colors and textures. PokeKing, PokeBowl, PokeWorks, Ocean Poke, Hokey Poke, Bravo Poke, Wisefish Poke, and Poke are challenging fast food and QSR formats.

"3D-Printing will create more tactile food experiences and become a more efficient and less wasteful food production method.”

3. Farming

“It all starts with agriculture, where our food comes from. And that about to change dramatically. By 2050, the world’s population will reach 9.6 billion with 65% of us living in urban areas. Our land, water, soil and environment are all under siege and the USDA says that climate change is going to create challenges for us all.

“This is a more direct farm to consumer connection as communities strive to get closer to nature. More consumers are opting for a plant-based diet. The FreshFoodNY app is a virtual farmers market where New Yorkers can purchase local food directly from NY farmers, fisherman and artisans. There is a new breed of younger farmers entering the fields; the USDA’s latest Census of Agriculture reports that the number of farmers aged under 35 is increasing that’s only the second time that’s happened since 1900. Sixty-nine percent of these new farmers have college degrees, far higher than the 40% incidence of the general population. Younger, smarter farmers will bring us into a new era of agriculture.

“Vertical indoor farming is more efficient bringing more farms closer to where people live, reducing expense and environmental impact. Bill Gates has bought 25,000 acres to develop a new ‘smart city’ from the ground up; which I hope could be a new model for a food community – it's the perfect platform for vertical farming, drone and autonomous vehicle deliveries of groceries and who knows what else?”

4 & 5. NeuroNutrition and BioHacking

“The unfortunate reality is the fact that the foods we eat is the No. 1 cause of preventable death and disease in the United States. Harvard's T.H. Chan School of Public Health recently reported that by the time today's kids are 35, half will be obese. It is time to get our priorities straight. About 10% of the world’s population is on some kind of ‘exclusion diet’ to avoid certain foods because of a specific ailment or allergy. Consider ‘excluding foods’ for preferences, and that number is reported to be well over 50% of the population. Even worse is the new report from the Barilla Center for Food & Nutrition that ranked the US 21 out of 34 countries in their Food Sustainability Index. The reason our score is so low is based on our inability to fight nutritional challenges. The U.S. consumer is getting smarter about food choices than ever, but we still have a long way to go.

“The most exciting, may well be based on our DNA that can determine what foods we need to achieve that ‘fountain of youth’ that Ponce DeLeon once promised. It’s not in Florida, but instead in just about every supermarket. Back in 2005, Hy-Vee, Byerly's and supermarkets sold Cellf, a DNA kit with a singular trait for heart disease or diabetes among others. Consumers were not ready.

“Now we are. Neil Grimmer, CEO of Habit, who brought us Plum Organics, is one of the leaders in this emerging space based on his personal experience in gaining weight and seeing his health diminish with his new DNA kit and nutritional foods startup Habit.”

6. Technofoodology

“’Technofoodology’ and artificial intelligence are the best things to ever happen to a grocery store. Alexa, Google Home, Sonos and other home-based assistants are ushering in a new way to buy our foods. We can easily replenish our foods by asking Alexa to reorder from Amazon; and just last week one of the nation’s leading c-stores, Sheetz, announced that their ‘made to order foods’ from all their 564 stores can be ordered on Alexa.

“By 2020 there will be 55 million smart devices in our homes making that the biggest supermarket chain on the planet.

“What this clearly shows is that relationship between ‘the internet of things’ and food is here. In our homes, smart refrigerators and cupboards will take over the automatic replenishment of those branded products that we can’t live without. The branded paper towels, condiments and other products we never want to run out of – those branded staples we love – will be auto replenished, which leaves the supermarket with the ‘exciting’ foods – the fresh foods, the artisan foods, the prepared foods to focus on and will allow the stores to become exceptional.

7. Advertising

“David Ogilvy wrote: ‘The creative process requires more than reason. Most original thinking isn't even verbal. It requires 'a groping experimentation with ideas, governed by intuitive hunches and inspired by the unconscious.' The majority of business men are incapable of original thinking because they are unable to escape from the tyranny of reason. Their imaginations are blocked.

“Advertising should inform and get people to buy, no question. When it comes to our foods it also needs to tell the truth especially about nutrition.

“Today, people want a connection with the foods they eat, they want to know where foods come from; and if we can use advertising to empower them to eat healthier we have achieved success. The Muppets’ Cookie Monster is no longer filling himself with cookies – he has a new cooking show focused on food. He and his sidekick, Gonger, embark on journeys in their food truck to source the ingredients. An Anthony Bourdain for kids, if you will, in a food segment which offers great promise in teaching our kids where our foods come from.

“It’s obviously not only what we eat, it is how we communicate our food messages, especially when it comes to nutrition issues that make the difference. What we believe has an impact on what and how much we consume.”

8. Security

“How safe do you feel these days? Personal security will be top of mind in 2018, we haven’t seen this state of anxiety since 9/11. The American Psychological Association’s 10th Annual Survey finds that over one third of Americans feel nervous or anxious and a similar amount feel anger or irritability. And we seem to be nervous about a lot. Retailers should add visible security in-store and in parking areas. People will be avoiding large groups and events, so retailers will bring events in-store, smaller ones and more often.

“One quarter of all women and 18% of men are coping with their stress by eating more – the good news is that over half say they are exercising more. But it is affecting America’s health & well-being and underscores the need for in-store dietitians to help shoppers cope with good nutrition and other well-being services. Chains like ShopRite and others offer exercise classes, and retail dietitians are offering meditation and yoga classes, all of which are helping shoppers cope, and at the same time, building a strong relationship that goes far beyond the price of a can of peas.

“Amazon and Walmart/Jet are testing in-home deliveries, which in my opinion just won’t work for a bunch of reasons, in particular, personal security. Home Grocer and WebVan experimented years ago with placing delivery units in people’s garages and that didn’t work; why do we now feel that allowing strangers direct access to our home to put milk in our fridge will? The idea of the opening of the lock triggers a video monitor on your phone, while maybe a nice feature that emotes security, also opens the system to hackers. And then there is the whole issue that once the Amazon Key is connected to your door - you are 100% Amazon for life.

“The one benefit to all this anxiety? Over half of Americans say that because of the state of America they are volunteering and supporting causes that are close to their hearts; which underscores the opportunity for retailers and brands to do the same and align values with their current and potential customers.”

9. Politics & Food

“This is not about political parties, it is an overview of where we are today and what is coming. The USDA is one of the most powerful and largest government agencies and has not yet been fully staffed. Food Policy Action has created a scorecard that clearly depicts that food has now become a bi-partisan issue as many existing regulations are being dismantled. To date there have only been six bills voted on to score; and all the votes have been along strict party lines.

“Among the most troubling to food businesses has been the withdrawal from the Paris Climate Agreement. ‘We Are Still In’ is a commitment that is heavily supported by food, farmers and ranchers and CSA’s in particular, but only a few retailers have signed on to continue the tenants of the agreement.

“There are two important focused efforts that will impact our food world in 2018. The first is the San Francisco ordinance that requires retailers to report antibiotic use by meat and poultry suppliers. Mill Valley, just across the Golden Gate was where the ban on Trans Fats first started, and this ordinance could also expand across the country.

“The second is the Farm Bill that sets in place for a five-year period eating and farming policy. Oregon Congressman (D) Earl Blumenthal has put together a terrific review of his position and the issues at hand. "The Fight for Food" is well worth the read as we gear up for what I believe will be the most controversial debates on the Farm Bill we have witnessed in our lifetimes.

10. Future Supermarkets

“Our final insight focuses on what the supermarket itself may look like in 2018 and beyond. It’s been a game-changing year for our industry and has set the foundation in place for an entirely new way to look at supermarkets.

“In 1989 I sat down with Herbert Hofer, a European artist and shared my vision for what I hoped the Supermarket in the Year 2000 would be. ‘No aisles, no gondolas, lots of fresh foods, lots of excitement, no check stands, products grouped by meal occasions,’ – the topline was a food experience second to none. We haven’t gotten there yet, but the stores that are being built today are closer to this vision than ever.

“It’s time we rethink the four-walled structure, much like Apple has done for their new headquarters.  The grocery industry should wake up each morning thinking about how we can make the shopping experience better. It’s time to build stores that are truly energy efficient with solar glass blocks and solar roofing that not only reduce energy but creates additional energy that could power an entire store.

“Online grocery is at the top of everyone’s list and there is no doubt that it will continue to grow and evolve. Click & collect will become the dominant online channel for all the reasons described here today. Today, approximately 25% of all grocers offer this service. KMPG reports that almost 75% of shoppers would use this service to avoid delivery costs and the International Council of Shopping centers found that 61% who do use click & collect also come in the store and make additional purchases. Shoppers do want to have a relationship with their supermarket. They don’t want the experience to be faceless.

“Online delivery will become more fractured, and more local. As we see these companies popping up on the landscape, companies like Milk & Eggs, GoodEggs, and Thrive Market are creating a new model that serve just a local area with a specialty, and have developed unique, and sometimes proprietary relationships with farmers and purveyors to offer curated offerings. They are not trying to offer the 40,000 products that are on the supermarket shelves; in fact, many of the products they offer aren’t on the supermarket shelves at all. Tomorrow, Boxed Spirits launches in California - the first bulk-sized alcohol e-commerce play that is directed to steal business from Costco and Sam's in this category. We will see the larger national and regional delivery players having to shift to the auto replenishment model.

“One of the biggest threats to traditional grocers is being created by blockchain technology. INS Ecosystem wants to reinvent the way people shop for food. They have raised over $60 million and Unilever and scores of other manufacturers are signed up as partners. The goal is to 'out-Amazon' Amazon, with even greater efficiencies and to have brands sell direct to consumers and eliminate retailers entirely.

“As much as tech might want to disrupt the way people shop and make everything more efficient. Let’s remember that this business is all about people and our relationship to shoppers. It’s time to imagine just what a supermarket can be.”

Lempert concluded the webcast by asking: “What’s your wow [opportunities] to help people get excited and engaged with you in your stores and on your social networks?”