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Trouble in Aisle 5

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A new study that focuses attention on the food-at-home industry -- a.k.a. supermarkets, local grocers and chains that sell food -- finds that these retailers, already battling indigestion, need to brace themselves against more troubles in the near future.

“Trouble in Aisle 5,” a joint study published by global investment bank Jefferies and global business advisory firm AlixPartners, contends that “a confluence of changing demographics, economic factors and customer preferences has the potential to create a long-term disruption across the food-industry value chain that transforms where and how consumers shop for groceries, as well as what products they choose.”

The study, based on a survey of 2,000 adult grocery shoppers, identifies the root cause of the impending transformation to be changing demographics as Millennials enter their primary spending years and Baby Boomer spending patterns begin to shift downward.

Among the key findings in the study:
• Millennials buy only 41 percent of their food at traditional grocery stores, compared with the Boomers’ 50 percent.

• While Boomers tended to buy the same brands from the same store week after week, Millennials value convenience and freshness over brand or store loyalty.

• Convenience is key. Grocery delivery services, convenience stores and online retailers are becoming increasingly important food sources for the latest generation of shoppers.

• Millennials are more price-sensitive than Baby Boomers, yet they’re willing to pay more for the specific attributes they value: convenience, freshness, health, variety (in flavor, international/ethnic cuisine, product size, etc.) and natural/organic.

• Millennials will make up approximately 19 percent of Americans in 2020, when it will have nearly caught up with the population of Baby Boomers.

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