The NEW Con$umer Post-Recession

Despite some rough years, specialty food sales are strong. According to the National Association for the Specialty Food Trade (NASFT) “2011 State of the Specialty Food Industry” report, retail sales increased 7.4 percent in 2010 over the previous year, well above the rate of inflation. Total sales of specialty foods were at $70.32 billion, with $55.92 billion sales at retail, notes the study, a collaboration with market researchers Mintel International and SPINS.

But just because people are spending more doesn’t mean that they’ve reverted to pre-recession behavior. Ogilvy & Mather Chicago, in partnership with the consumer insight company Communispace, also recently published a study on the post-recession consumer’s mindset. Among their findings: Consumers are far more likely to research a product before making a purchase, large or small, and will choose the brand with better information and a more personal message.

“Today’s consumer is even more complicated than before,” wrote Manila Austin, Ph.D., Communispace’s director of research. “We called this study ‘Eyes Wide Open, Wallets Half Shut’ to reflect the challenge of understanding and connecting with how post-recession consumers view the world.”

Retailers in five areas of the countryóthe Northeast, Mid-Atlantic, South, West and Midwestóshare what has changed in the past year. What do they see attracting today’s consumers? And which categories are shoppers most willing to spend on?

Local and Organic

In the “2011 State of the Specialty Food Industry” report, 75 percent of retailers surveyed state that “local” is the claim that generates the most consumer interest today. Organic products placed second in importance, with 52 percent of retailers saying it is a significant claim with consumers.

“Local is big here in Kansas City and starting to grow in our Wichita store,” says Shannon Hoffman, an owner of Green Acres Market, which focuses on natural- food products and wellness. Even though Green Acres sells fresh produce in its store, it runs a weekly farmers market in its parking lot to help build a sense of community.

During the recession, Hoffman says the store focused more on creating value offerings and running sales. Core customers continued to come in for fresh local eggs and organic milk out of health concerns for their children but chose cheaper, conventional fruits and vegetables over organic.

“I think they thought, ‘As long as I’m getting fruits and vegetables in my diet, I’m still taking care of my health,’” she says, adding that the store’s organic sales are up again this year. “Before, people seemed more concerned with financial health and now we’re seeing them make personal health more of a priority.”

“Now we’re seeing old customers who weren’t able to afford to come on a regular basis,” says Hoffman. “Our dollar per ring is up 10 to 15 percent over last year. You can feel the energy.”

A keen awareness of local products also characterizes the customers at Star Provisions in Atlanta, Ga. Tim Gaddis, the store’s cheese and specialty buyer, notes, “We’ve always concentrated hard on local Southeastern stuff, and people are getting in tune with that. Local seems to be the number-one thing they’re asking for, including locally made chocolate and locally roasted coffee beans.” He estimates that sales are up 15 percent from the previous year.

Fair Trade, another movement for the socially conscious, however, recently has seen mixed results. The 2011 NASFT study shows that just 13 percent of retailers cited Fair Trade as generating consumer interest (although 22 percent of retailers speculate that that claim will rise in influence in the next three years).

“Our customers aren’t big on Fair Trade,” agrees Green Acres’ Hoffman.
“But they do trust us to source from
reliable vendors.”

“I’ve never heard anyone ask for Fair Trade or if something was sustainable,” says Pat McCarthy, the owner of DeLaurenti Specialty Food & Wine in Seattle. “But I think many producers are practicing
it intrinsically.”

Asked about his observations of customers in the post-recession economy, McCarthy jokes, “It’s over?” Getting more serious, he says, “What’s sort of weird is that last year we had our best year ever, more in sales than ever before.” He attributes the increase largely to his customers’ sophisticated taste, noting, “Once you’ve had really nice coffee you never go back. Once you’ve had great cheese you can’t go back to the green can.”

While DeLaurenti specializes in imported Italian products- olive oil, prosciutto di Parma, Parmigiano ReggianoóMcCarthy says he is getting a lot of requests for local cheeses. The DeLaurenti team makes an effort to promote local cheese-makers (“gentleman farmers, Microsoft guys going into business for themselves,” McCarthy describes them) through an annual cheese festival that is now in its seventh year. The store also does big business selling bread from local bakeries. But the strongest part of their business growth, McCarthy observes, is wine sales, including those locally produced in Washington and Oregon. “It was our biggest surprise last year,” he says.

Locally made ice cream has been a big seller at Arrowine and Cheese, Arlington, Va., says the shop’s cheese manager, Perry Soulos. “It’s our year anniversary of carrying it and we are selling two or three times as much as last year, for $10.99 a pint,” he says. Arrowine has also found success purveying locally made sausage and pasta products. “They have a cult following,” Soulos says of the local products. “The sausages are hormone- and antibiotic-free, something that gets asked about a lot. People are also concerned about nitrates in meat.”

Quality Over Quantity

During the recession, a trend arose to scale back on volume of purchases while focusing on quality. The commitment to premium products remains, even if the changing economy has allowed for purse strings to loosen. According to the Ogilvy & Mather Chicago study, quality is still “in,” with 73 percent of consumers surveyed saying they would rather have fewer, high-quality things.

“Customers never give up their chocolate,” says Amy Nadeau, the food buyer for Savenor’s Market in Cambridge, Mass. During the recession, she says, chocolate lovers bought smaller quantities of artisan chocolate. “Instead of spending $7.99 or $8.99 on a whole bar they’d buy a turtle or a peanut butter cup,” she says. “Chocolate people always go for quality.”

“People cannot not have good chocolate,” agrees Pat McCarthy of DeLaurenti, whether during a recession or now.

The focus on product quality applies to various specialty food categories. Even when the economy was suffering the most, Nadeau noticed, “People would pay extra for grass-fed beef over industrially raised. They’re asking about hormones and have seen the movies Food, Inc. and Fast Food Nation. They never want to feed their children something that’s not 100 percent wonderful for them.”

The same desire for a premium product, evidently, goes for cheese. “We cut smaller pieces of cheese,” Nadeau says of recessionary times. “Customers still wanted nice cheeses but it was a $3 slice of Brie instead of a $7 slice. Americans really value good cheese now.” This is one of the reasons why cheese and cheese alternatives were number-one in specialty food sales at retail, up 6.1 percent since 2008, according to the 2011 NASFT report. The category accounted for $3.23 billion in sales, followed by meats, poultry and seafood.

“People are buying more cheese than ever,” says Arrowine’s Soulos. “They’re experimenting more with farmstead American cheeses. Since the economy improved, they’re entertaining more and buying a lot of cheese for their functions.”

Retail Sales Over Restaurants

At DeLaurenti, McCarthy believes the increased sales are “a function of restaurants suffering. The overall trend is eating at home, but [consumers] still want to eat well,” he says.

“We’ve seen a lift of 25 percent in the past two years,” says Nadeau of Savenor’s. “People are cooking so they come to us. We’re picking up where restaurants are losing. They can get a nice $20 bottle of wine from us instead of paying triple for the same bottle at a restaurant.”

Gaddis also reports that sales have picked up in Atlanta for fine cheeses and dry aged meats. Star Provisions is attached to a white-tablecloth restaurant called Bacchanalia, regularly voted over the past 10 years as one of Atlanta’s best restaurants. Guests must pass through Star Provisions, essentially the restaurant’s pantry, to get there. “What we noticed during the recession was more people shopping with us and fewer going on to dine in the restaurant,” Gaddis says.

New Specialty Food Consumers

“We’re seeing more and more families, a big thing that’s been great for us,” says Green Acres’ Hoffman. “They’re buying bigger baskets instead of just for individuals. My gut feeling is that they’re opening up and saying, ‘I want to shop better for my family.’”

At Savenor’s, Nadeau is seeing more young people. “We have the customers we’ve always had but we’ve increased the traffic of the twentysomethings. The Food Network has piqued the interest of people who want to make their own sausage, and they know we sell prime, high-end meats. People might come in looking for verjus, which you know they saw on the Food Network.”

The store’s heavier traffic from twentysomethings also likely has to do with the way Savenor’s is using social networking. “We do Facebook and Twitter, and if we’re introducing a new product or sampling something at the store, we tweet about it,” explains Nadeau. “It keeps [followers] current on what we’re doing and really brings them in.”

McCarthy has noticed two age groups becoming more prevalent in his Seattle specialty store: “Young foodies or locavores or whatever you want to call them. Then there’s our older clientele who have traveled to Europe and can afford to eat what they like.”

Gaddis says he was seeing more “young marrieds, no children,” but largely through a happy coincidence of Star Provision’s Atlanta location. “I give a lot of credit to the fact that there’s been condo development in our area, the West Side district, in the past five years so more people are just walking by and stopping in,” he says. “During the recession our regulars still came in every week, straightforward about getting what they needed, but I’ve been noticing more casual shoppers lately, more foot traffic
on Saturdays.”

Arrowine has a good mix of customers of all ages, Soulos says, speaking by phone one weekday afternoon. “We’ve been seeing more young people and middle-aged shoppers,” he explains. “In general, I think people are shopping retail more; even though things are better, they are still going out less. They have access to better ingredients now so they can do things at home that used to be exclusive to restaurants. And so many of them have these gigantic, state-of-the-art kitchens and want to entertain in them more. Look, I’ve got four customers standing here waiting for me right now. I’ve got to go.” |SFM|

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Julie Besonen is the food editor at Paper magazine, writes a weekly restaurant column for nycgo.com and has contributed to The New York Times and the New York Daily News.

This article was featured in the July 2011 issue of Specialty Food Magazine. See other articles in this issue at: July 2011 Specialty Food Magazine.

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