Transparency has become one of the top concerns of grocery retailers and their supplier partners, as American consumers — millennials and Gen Zers in particular — increasingly demand to know as much about their foods as possible.
In response, the Washington, D.C.-based Food Marketing Institute has made transparency one of its top priorities in recent years, with studies, webinars, a running blog and other programs and initiatives dedicated to the issue.
David Fikes, FMI’s vice president of communications, community and consumer affairs, says that modern-day consumers’ concerns for transparency have deep roots.
“Two hundred years ago, everyone knew where and how their food was produced because they were likely involved in most aspects of its local production,” Fikes says. “This meant they were intimately aware of the hazards, costs and labor that accompanied food’s journey to the plate. There was no need to ask about their food’s story because they were an active part of its plot line.”
Today, however, most shoppers are three, four or five generations removed from the farm, Fikes says. The fact that they lack a firsthand awareness of the details of their food and its origins necessarily makes them curious. And those asking these questions are seeking connection by utilizing the tool they use for most of their connectivity these days – their electronic devices.
“Consumers want retailers and manufacturers to be open and honest about the ingredients and processes used to ensure food safety as well as the source of the ingredients used in the products,” Fikes says. “Our U.S. Grocery Shopper Trends research has well substantiated that shoppers today ask more questions about their food than ever before.”
The right information, not information overload
Some of that is due to the information-oriented nature of things these days, where facts and figures fly freely. Consumers are exposed to more data in a minute than we could assimilate in a month. Shoppers want understandable, honest information that serves their needs, supports their attaining health and wellness goals, offers food safety assurance and promotes deeper trust in both the products and the retailers who sell them.
“This shopper desire for transparency was a focus in the Shopper Trends study,” Fikes says. “Our annual shopper behavior analysis found that shoppers increasingly look to retailers to cut through the confusion by providing clear, practical information, empowering them to make smart purchasing decisions.”
One great way retailers and their supplier partners can up their transparency games, Fikes says, is through participation in the SmartLabel program, which provides consumers with a wealth of information about a wide variety of products via their phones or other devices.
“More than 60 companies, 926 brands and 70,000 products participate in SmartLabel,” Fikes says. “SmartLabel and other technologies that give consumers in-depth details about products are part of the future of supply chain transparency. Additionally, utilizing SmartLabel allows the industry a quicker response time versus the cost and time constraints of updating packaging.”
Today’s food retailer must work hand-in-hand with the producer and the supplier to know the story behind the food they sell, then seek out the most advantageous means of sharing it.
75% of shoppers said they were more likely to switch to a brand that provides more in-depth product information beyond what is provided on the label. By contrast, in 2016, only 39% of shoppers said they would switch brands when asked the same question.
Source: FMI and Label Insight
It’s not enough, Fikes says, to just carry the product. Retailers and suppliers must be able to introduce it to the customer with the necessary background for the shopper to make a connection. And if they can’t do it in person, they must help facilitate access to accurate information online so that the story the customer finds virtually is accurate and thorough.
“This is an opportunity for improvement for us,” he says. “We must get better at telling the whole story of the food we sell.”
Tools for success
FMI and the Kansas City, Missouri-based Center for Food Integrity (CFI) have released a white paper, Transparency Roadmap for Food Retailers: Strategies to Build Consumer Trust, to address the central importance of transparency in today’s food world. It offers guidance for retailers and their supplier partners to provide shoppers with clear information about their food.
FMI and CFI have also developed a free, online course to help food retail professionals create a culture of transparency in food organizations that promotes enhanced shopper trust and loyalty. The online learning experience includes three parts, so participants have time to digest each portion, partake in interactive learning experiences and really dig into this complex topic. Links to the courses can be found at www.FMI.org/transparency.
“Transparency is the currency of trust in a digital age,” Fikes says. “It provides the shortcuts shoppers seek to help them navigate an increasingly complex food system. In order for all of us to succeed in giving the shopper the information he or she wants, transparency must also characterize the exchanges between food manufacturers and food retailers.”
The importance of labels
FMI also partnered with Chicago-based Label Insight on a deep dive into transparency. Its main finding: consumer perceptions about the importance of transparency are rising. Seventy-five per cent of the shoppers surveyed said they were more likely to switch to a brand that provides more in-depth product information beyond what is provided on the label.
By contrast, in 2016, only 39% of shoppers said they would switch brands when asked the same question.
“The new shopper mindset requires brand owners to think about their products well beyond the traditional label and respect a more digitally-minded consumer,” says Doug Baker, vice-president of industry relations at FMI. “The study offers several considerations for how to make the best use of these findings, but overall, they require companies to recognize and communicate the importance of transparency and perform a thorough review of their unique consumer audiences and commerce channels.”
The survey’s methodology included a random sample of more than 2,000 U.S. grocery shoppers 18 years of age and older. Quotas were established to ensure survey respondents were representative of the U.S. population by age, region and gender, according to the authors.
For the total survey group, ingredient and nutrition information remain the primary pieces of information consumers are interested in related to transparency. When asked to define transparency, 65% said it included a complete list of ingredients. Fifty-nine per cent took it a step further and said transparency requires a “plain English description of ingredients,” and 46% said it was in-depth nutrition information.
From a demographic perspective, there were some differences in the responses. Baby boomers and Gen X, for example, focus on ingredients and nutrition. Millennials, too, focus on ingredients and nutrition, but are more likely to consider if allergen information, certifications and other claims are provided.
Online grocery shoppers expect more product information (76%) when shopping online than if they were in a physical store; and 72% believe getting product information is even more important when shopping online. Additionally, 81% said they are willing to switch to a brand that provides more in-depth product information, compared to 75% of general shoppers.
Source: FMI and Label Insight
To search for and review product information, consumers are using smartphones to access brand websites and grocery apps. Seventy-three per cent of consumers surveyed said they know where to look for more detailed product information about the products they buy. This may be important, because 50% of consumers said they found product labels too hard to read and too confusing.
At a more granular level, the report identified a sub-segment of consumers they defined as “health-conscious shoppers” and said they are a key driver in the demand for transparency. For example, 47% of American households have someone on a diet or following a health-related program and would fall into this category. These shoppers are more likely to place a premium on transparency, with 61% saying they are willing to pay more for products that offer in-depth product information, versus 54% of general shoppers. When the information on a label is not sufficient health-conscious shoppers are very likely to seek out information elsewhere.
The study also found the presence of children in the home increased the desire for transparency. Shoppers with children are more likely to place greater importance on ingredient information, nutrition and health benefits. They were also likely to find value in accessing detailed product information in-store on their smartphone.
The demand for transparency also increases when consumers are shopping online, according to the report. Online grocery shoppers expect more product information (76%) when shopping online than if they were in a physical store; and 72% believe getting product information is even more important when shopping online. Additionally, 81% said they are willing to switch to a brand that provides more in-depth product information, compared to 75% of general shoppers.
“We titled this report The Transparency Imperative because as we executed the research to bring the key findings of our 2016 studies current, we see clearly that transparency is only becoming more important to consumers,” says Patrick Moorhead, chief marketing officer for Label Insight. “Their attitudes and preferences, particularly with the growth of e-commerce, make it clear that transparency is critical to growth and our industry must take action.”