The Shifting Consumer Value Equation
This month, CGT talks to Deloitte Consulting Partner, Jack Ringquist, who shares key takeaways from a recent study that Deloitte, in partnership with FMI and GMA, conducted on how companies can capitalize on the shifting consumer value equation.
How has the consumer food value equation shifted?
Ringquist: Historically, consumers have made decisions based on traditional drivers: taste, price, and convenience. Evolving drivers such as health and wellness, safety, social impact, experience, and transparency have been present in the minds of consumers, but few actually based their purchase decisions on them, particularly beyond niche products or channels. This is where the shift has occurred.
About half of consumers surveyed indicated they weigh evolving drivers more heavily than traditional drivers. What’s more staggering is that this evolution is persistent across demographics. Evolving drivers are equally important across age groups, income levels, and regions, meaning that nearly all of food manufacturers’ target consumers have changed in a fundamental and impactful way.
What are the implications for the food industry?
Ringquist: Evolving value drivers have expanded beyond a niche market and the consumers that favor those drivers have significant buying power. This is not a trend, but a new normal, which represents a meaningful and scalable opportunity for the industry. The new normal means that consumer tastes and preferences will continue to fragment and competitors will adjust to meet these needs with new and unique value propositions.
To make matters more complex, consumers who place more value on the evolving drivers appear more likely to use social media, mobile applications, and digital sources to acquire information about products or brands on the path to purchase making it more challenging than ever for consumer goods companies to control messaging. These consumers are also more prone to distrust the food industry in general, particularly large brands. The most effective competitors are taking new approaches to technologies, third-party relationships, and improved engagement to earn consumer trust.
What should consumer goods companies be doing to prepare and respond to this shift?
Ringquist: The Deloitte/FMI/GMA research clearly highlights a seismic shift in consumer expectations and consumer goods companies must consider a response of equal magnitude to meet consumers’ evolving needs. Real transformative change — far more than typical attempts at dabbling with new initiatives — is needed.
Focusing on the issue of trust, big brands must engage consumers in genuine, two-way dialogue that increases transparency and assures alignment with consumer preferences. Building on a foundation of trust, companies can invest in market sensing tools to predict major trends relevant at multiple levels (market, category, and product) and quickly adapt in a credible way.
There is no “silver bullet” as every company’s situation is unique (e.g., current capabilities, publicly versus private ownership, etc.) and choices must be based on that context. What will likely hold constant across the industry is that driving growth will require systematic, integrated, and distinct choices that support a broader consumer agenda.
For more information see the Consumer Products page on www.Deloitte.com.
How has the consumer food value equation shifted?
Ringquist: Historically, consumers have made decisions based on traditional drivers: taste, price, and convenience. Evolving drivers such as health and wellness, safety, social impact, experience, and transparency have been present in the minds of consumers, but few actually based their purchase decisions on them, particularly beyond niche products or channels. This is where the shift has occurred.
About half of consumers surveyed indicated they weigh evolving drivers more heavily than traditional drivers. What’s more staggering is that this evolution is persistent across demographics. Evolving drivers are equally important across age groups, income levels, and regions, meaning that nearly all of food manufacturers’ target consumers have changed in a fundamental and impactful way.
What are the implications for the food industry?
Ringquist: Evolving value drivers have expanded beyond a niche market and the consumers that favor those drivers have significant buying power. This is not a trend, but a new normal, which represents a meaningful and scalable opportunity for the industry. The new normal means that consumer tastes and preferences will continue to fragment and competitors will adjust to meet these needs with new and unique value propositions.
To make matters more complex, consumers who place more value on the evolving drivers appear more likely to use social media, mobile applications, and digital sources to acquire information about products or brands on the path to purchase making it more challenging than ever for consumer goods companies to control messaging. These consumers are also more prone to distrust the food industry in general, particularly large brands. The most effective competitors are taking new approaches to technologies, third-party relationships, and improved engagement to earn consumer trust.
What should consumer goods companies be doing to prepare and respond to this shift?
Ringquist: The Deloitte/FMI/GMA research clearly highlights a seismic shift in consumer expectations and consumer goods companies must consider a response of equal magnitude to meet consumers’ evolving needs. Real transformative change — far more than typical attempts at dabbling with new initiatives — is needed.
Focusing on the issue of trust, big brands must engage consumers in genuine, two-way dialogue that increases transparency and assures alignment with consumer preferences. Building on a foundation of trust, companies can invest in market sensing tools to predict major trends relevant at multiple levels (market, category, and product) and quickly adapt in a credible way.
There is no “silver bullet” as every company’s situation is unique (e.g., current capabilities, publicly versus private ownership, etc.) and choices must be based on that context. What will likely hold constant across the industry is that driving growth will require systematic, integrated, and distinct choices that support a broader consumer agenda.
For more information see the Consumer Products page on www.Deloitte.com.