“Americans have embraced the experience of eating out, with ‘away-from-home’ spending hitting a major milestone midway through this decade … breaking a pattern that hadn’t changed much since the 1970s,” and leaving retailers, restaurants and manufacturers alike scrambling to adjust, according to Nielsen’s recently published Merging Tables and Aisles report.
It explains, “until very recently, we allotted about two-thirds of our food and beverage spend on in-store purchases – the bread and butter of the traditional supermarket,” and since the 1970s about a third of the food and beverage budget when to eating out.
But as of 2014, “trends across all foods and beverages were in flux,” and the budgeted amount for eating out jumped to more than 50%, causing in-store spend to drop 16 points to 48%, according to Nielsen.
“There is an upside, however,” Nielsen notes in a blog post related to the research. “The total amount of money we spend on food is growing,” which is good news for all stakeholders.
For example, the amount Americans spent on food at home increased 59% to $793 billion since 2003. The amount spent away from home, however, grew substantially more – up 94% to $800 billion since 2003.
“The challenge for all food retailers then, is attracting a greater portion of that total spend,” Nielsen quips in the blog post.
However, this may be easier said than done as retailers and product manufacturers cannot simply shift their focus to food service and restaurants in order to make up the difference.
Nielsen explains the competition is not just between eating-out and eating-in. Rather, the consumer research firm says, the competition includes a “bevy of new options” that combine aspects of restaurants, grocers, farmers and concierge as well as a stronger competitive presence from convenience stores, online restaurant delivery aggregators and specialty stores.
As such, stakeholders “need a detailed, data-driven understanding of the types of food people are buying, when they’re buying it and where,” Nielsen says in the report, adding, “mastering the combination of these elements is the way to win the most demand.”
This means looking deeper than simply at generational divides, Nielsen says, to consider the different values, pressures and available resources that cut across age groups.
To help stakeholders do this, Nielsen divides shoppers into four categories: traditionalist food shoppers, restaurant occasion lovers, digital adopters and multi-channel adapters.
Each group has unique characteristics, but are willing to buy the same product as long as it is offered in a way that meets their needs. For example, traditionalist food shoppers who favor eating at home may be inspired to make a pizza if offered new toppings, while a restaurant occasion lover will want a pizza that is an experience – such as served with a wine pairing. Digital adopters, on the other hand, will want an effortless ordering and paying experience, and multi-channel adopters might want pizza bites they can grab at a c-store and eat on the go.
Ultimately, the Nielsen report says, “retailers and restaurants must develop food and beverage strategies at the intersection of shoppers’ desired occasions, locations and experiences, focusing on the key combinations where they are poised to excel.”