Consumers are discovering their influence and buying power around our most basic need of all – food.
The post-pandemic fallout, war in Ukraine, and climate crisis loom large in everyday reality. Our shifting, uncertain times means people are thinking differently about absolutely everything – not least the food on their table. And consumers have, well, developed a different taste for what they eat, how they buy it, where it comes from. It seems this crisis time is proving transformative.
We are seeing last changes in consumer behaviour and buying trends when it comes to our most need of all – food. Here’s a snapshot of some of these shifts:
Consumers are discovering their power
People are reassessing the way they spend their money, with research showing that the more powerful we feel, the more likely we are to make principled purchases.
About a quarter of people (24%) believe the choices they make as consumers can have a significant positive impact on efforts to tackle climate change, according to an ING survey of 4,000 consumers from across Europe, North America and the Asia-Pacific region. Those choices include which products they buy and the extent to which they recycle.
Three-quarters of them (72%) say their purchasing choices today are more influenced by environmental factors than they were before the pandemic. This momentum will give a boost to environmental campaigners, who have worked hard to overcome the widespread perception that individuals are powerless to fight climate change.
ING’s research suggests that the intention to purchase sustainably is certainly higher among ‘changemakers’ or conscious consumers. While 57% of all consumers say they would be prepared to pay higher prices for products manufactured in an environmentally friendly way, the figure rises to 74% among this segment of consumers.
And the behaviour gap has narrowed in recent years. A study by New York University shows that 50% of sales growth in the US for consumer-packaged goods between 2013 and 2018 went to 17% of products marketed as sustainable.
The new influencers
Helena Rubinstein, Head of Behavioural Science at Innovia Technology, says: “Forming a green identity seems to be important. [And] seeing yourself as the type of person who is a green consumer and believing that one can make a difference by buying something different might encourage people to do more of it.”
With the conscious consumers now accounting for a quarter of all consumers, these kinds of decisions will rapidly make an impact on the commercial performance of businesses around the world, and incentivise those companies to take positive climate-change action.
The cost of losing these consumers’ goodwill will be high: 79% of these consumers say they would be less willing to buy products from companies that do not take their environmental responsibilities seriously. And as businesses are forced to respond to that stance, more and more consumers are likely to feel empowered and become changemakers.
Shoppers turning to local produce
Rising inflation means cost looms large as we choose what foods to buy, but it is not the only consideration. Research from ING shows that food producers and retailers can attract shoppers with sustainability.
The survey of more than 4,000 consumers worldwide shows that some 60% of shoppers are now more likely to purchase fresh, local produce from identified sources. And the impact is likely to endure into the future: 68% say that the pandemic years showed us it is possible to make lasting societal changes that benefit the environment, and 64% expect the events of recent years to have a long-term impact on their shopping, food and transport preferences.
For some consumers, the empty shelves that characterised the early stages of the pandemic were a wake-up call. They had taken for granted the convenience of globalised, just-in-time supply chains; perhaps local shops and smaller domestic producers would be safer and more reliable. And if that shift is also better for the planet, even better.
Two years on and the Ukraine war has upped the ante around this thinking, with food security top of mind and prices spiking across the world.
“The world has become aware that the food system is not as resilient as it needs to be,” says Chris Daly, VP Sustainability at PepsiCo Europe.
“[There is] greater awareness about sustainability,” says Daly. “A lot of people are more willing to accept a call to action now than they would have been before. And companies respond to what their customers want: if customers raise their voices, things will happen.”
Does sustainability have to come at a cost?
If not protesting vocally, then customers are at least voting with their wallets. In ING’s research, 58% say they now take sustainability into consideration when deciding which food retailers to purchase from and which brands to buy. In China and India, it is even higher: 85% and 78% respectively. In European countries such as Belgium and the Netherlands, less than half of respondents are taking sustainability into consideration – potentially taking this for granted already.
Deborah Perkins, ING’s Global Head of Food & Agribusiness, expects the focus on sustainability to continue but warns that recessionary times will weigh on consumer spending. “Sustainability is a luxury that affluent consumers can say that they want. But at the end of the day, affordable food will be what everybody wants,” she says.
So does the food industry then simply consign these consumers, to less sustainable, less ethical produce?
“I would argue that the majority of the companies in the food sector are interested in sustainability because if they're not sustainable they're not going to be there for the long term,” Perkins says.
Create the right balance between affordability and sustainability is key. ING’s research suggests that consumers will look for products and services that reflect their changing values and principles, and that they are likely to be willing – if they are able – to pay significantly more for them.
Grocers laying the groundwork for the future of food retail
The explosion of online shopping seems to be one of the most enduring trends of our post-pandemic world. But not all shoppers are moving online, and individual shoppers will not always make purchases in the same way. So food retailers need to make sure they offer an integrated shopping experience that allows customers to shop however they want, wherever they want.
Forty-four percent of people are now more likely to buy their groceries online than they were before Covid-19, according to ING’s global consumer survey.
“Retailers will need to respond,” says Ruurd Streng, ING’s Director of Transaction Services Sales. “There were many consumers who were reluctant to buy their groceries online before Covid-19, but they are now comfortable with it and will continue to shop this way. The retailers that are going to do well will therefore be the ones that have a robust digital strategy.”
It is not easy to create infrastructure that can serve the full breadth of customer experiences, including accommodating the preferences of shoppers in different markets. Without a one-size-fits-all solution, retailers have to excel across the entire omnichannel offer.
That means they have to keep innovating. For example, the Amazon Go service is setting a new standard for autonomous stores. Thanks to computer vision and machine learning, shoppers’ purchases are scanned automatically as they are taken off the shelf, so customers can just walk out of the store when they finish; their Amazon accounts are then charged accordingly.
In a similar digital store concept, that was trialled in the Netherlands by supermarket chain Albert Heijn, a subsidiary of Ahold Delhaize, in partnership with ING, customers were able to check into the unmanned store by scanning their bank card instead of using an app.
Smooth payments operator
For innovation to succeed, retailers should focus on service at every stage of the customer journey – removing friction however shoppers choose to purchase.
Payments will be an important battleground. ING’s research shows that 74% of shoppers have increased their use of cashless payment methods as a result of Covid-19. Many will be reluctant to go back to their old ways of paying, particularly as they embrace new types of shopping. And innovations bring challenges of their own. For instance, 43% of shoppers say they have become more concerned about data privacy since increasing their use of cashless transactions.
Albert Heijn and ING launched a smartphone-based payment service for home deliveries, which allows customers to pay with their bank app by scanning a QR code. They also ran a tokenised payments pilot that gave consumers the option to replace sensitive data such as bank details with random numbers – tokens – to improve security.
The pandemic years accelerated trends that retailers were already grappling with. But they need to put in the groundwork behind the scenes before going fully omnichannel: can they confidently cater to new experiences and improve on basic pain points such as payments and data privacy? If they can, the future looks bright.
ING has partnered with Longitude, a Financial Times company, to provide the research insights that will inform business leaders in times of uncertainty. The Changemaker series presents regional and sector snapshots of how people think and which consumer trends will dominate now and in the future. This article has been adapted from partner content.