The Retale Millennial Grocery Report

Our first annual study examining the grocery store habits of millennials

Overview

With more than $200 billion in annual buying power1, millennials are the retail industry’s most sought after audience. And as more millennials escape their parents’ homes, they have quickly become one of the most important grocery shopping demographics today.

To help get a better sense of this massive segment and how they buy, we here at Retale decided to launch our first annual “Retale Millennial Grocery Report” – a commissioned study examining grocery shopping preferences among millennial (18-34 years old) consumers. As part of that, we also analyzed key differences between younger millennials (18-25) and older millennials (26-34.). In total, 1,000 millennials across the U.S. were polled for the study between May 2-6, 2016.

Our findings are as follows.

Only 8% have cut their grocery spending

According to Nielsen, the Great Recession has “fundamentally changed” consumer shopping and saving habits overall, and many in the country continue to feel the recession’s effects long after the 2009 bailouts.2 With this in mind, Retale evaluated recessionary impact on grocery buying, specifically, among survey respondents. 57% of millennials polled agreed that they had been personally affected by the recession and 43% disagreed. When comparing older millennials to younger millennials, the older group felt more affected: 64% of those 26-34 answered “yes,” while only 46% of those 18-25 agreed.

When asked which activity they were most likely to cut spending on, as a result of the recession’s impact, 36% of all millennials surveyed cited “eating out,” 30% said “entertainment,” and 21% said “buying clothes.” Only 8% said they would cut spending on “buying groceries.”

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“Like most age groups, millennial consumers have felt the recession’s impact,” said Retale’s President, Pat Dermody. “According to our data, to counteract it and save, they’re dining out less and opting to eat at home more. This is why there hasn’t been a sizable decline in grocery shopping, post-recession. Lost restaurant trips should ultimately benefit grocery retailers.”

When asked how often they shop for groceries, “2-3 trips a month” was the most popular choice (34%), followed by “once a week” (29%); “once a month” (15%); “2-4 times a week” (14%); “less than once a month” (6%); and “every day” (3%). For each trip, on average, 20% of millennials spend 0-$49; 37%  spend $50-99; 35% spend $100-200; and only 9% spend more than $200.

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34% call their grocery shopping style “thrifty”

Despite the ways the economy has managed to recover since the recession, millennials are still taking a practical and cost-conscious approach to buying.

When asked what would most likely influence where they bought their groceries, the top response was “lower costs or opportunities to save” (50%). “Availability of locally-grown or organic products” (38%) was the runner-up, followed by “store is close to my house or workplace” (34%); “technology that makes research and shopping easier” (31%); and “I shop based on specific recipes I’m interested in making” (28%).

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Similarly, when asked to describe their “grocery shopping style” in one word, “thrifty” was the most popular choice (34%). “Local” (24%) and “foodie” (23%) rounded out the top-three.

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“At the end of the day, when it comes to buying groceries, millennial consumers value cost above all else,” said Dermody. “Local or organic, store proximity or technology for convenience – they all come in second to savings. Grocers need to keep this in mind when considering how to best market and sell to this audience.”

When millennials were asked when they would be “most likely” to go grocery shopping, practicality and cost were the top reasons. 57% said they were most likely to shop when they “needed to restock on supplies” and 25% said when “deals and discounts are available.” 17% said they were most likely to shop when they were “planning meals or a recipe.”

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30% have ordered groceries online

According to a 2015 report by Nielsen, today, 25% of grocery shoppers buy online. Millennials polled by Retale, however, were more likely to buy groceries digitally, with 30% having placed orders online. Alternatively, 70% have not.

“Millennials are digital natives,” said Dermody. “It’s why they’re more inclined to buy online. Still, they overwhelmingly prefer to shop for groceries in-store.”

41% of older millennials, 26-34, have ordered groceries online while only 13% of younger millennials, 18-25, have used this service.

“As you get older, you’re more likely to have your own multi-person household, which increases your grocery needs and makes shopping more time consuming,” said Dermody. “As a result, for some, buying online can seem more convenient and efficient.”

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Of the 30% of all millennials who had placed online grocery orders, the split was about even between the use of smartphones or tablets (51%) and the use of a desktop or PC (48%).

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Just over 60% of all millennials who have ordered online had the store deliver their groceries, with 26% of respondents opting to pick them up in-store. A small group of respondents (11%) said they had used both options.

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The main reason for ordering online was convenience, while the second most popular answer was savings. 48% of those ordering online said they were saving time, while 35% said they were saving money. 12% of respondents said they ordered online because they did not have a car, so shipping home was the easier option.

This is one area of the survey where price was not the primary driver,” said Dermody. “Many millennials who use this service are looking for ways to save time above all else – even if it potentially means paying more, including a delivery fee.

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58% use grocery store loyalty program

Many retailers have been focusing on developing highly engaging loyalty programs to keep their shoppers returning, and millennials are taking advantage of the perks. 59% of those surveyed answered that they were members of their grocery store’s loyalty program, while only 41% were not. Of older millennials, age 26-34, 64% were members of a loyalty program, while only 49% of younger millennials, 18-25, were members.

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A majority (59%) of all millennials in loyalty programs said they signed up to get more discounts and coupons, while a smaller percentage (39%) wanted to take advantage of the program’s point-building system, where points earned from shopping can be used later for other deals.

“Loyalty programs continue to be synonymous with savings for consumers,” said Dermody. “For retailers, the data capture that accompanies loyalty programs is a valuable asset in merchandising and marketing.”

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38% most likely to choose grocery stores for shopping trips

There are a number of store options for shoppers to choose from, and when asked which kind they’d be most likely to visit, 38% of those surveyed chose grocery chain stores. 21% said they’d choose a super store (massive retail stores with a diverse assortment), with only 9% choosing dollar store, 8% opting for local independent grocery stores, and another 8% using a club or membership store. Smaller groups of respondents answered that they’d prefer a specialty food option or a simple convenience store, both earning about 5% of respondents’ answers.

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When asked to rate their own loyalty to their grocery store, 28% of millennials surveyed said they were “very loyal,” and another 36% said they were “somewhat loyal.” 26% answered that they were “neutral” in their loyalty, and only a small number said they were not very loyal or not at all loyal (7% and 3%, respectively).

 

43% use mobile for clipping and browsing coupons

Today, 92% of millennials own a smartphone.3 When asked if they used their mobile device before grocery shopping to help with their trip, the majority (52%) of millennials polled said “yes.” 48% said “no.” When comparing older millennials, 26-34, versus younger millennials, 18-25, older millennials were more likely to use their mobile device (62%), whereas only 36% of younger millennials had used their device before shopping.

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Similar to other data points that found millennials to be cost-conscious buyers, the most popular reason among all respondents to use a smartphone before they went shopping was to “clip mobile coupons” and “browse weekly ads” (43%). Rounding out the top-five are: “create and manage shopping lists” (27%); “find recipe inspiration” (12%); “find store locations and hours” (10%); and “look up loyalty account information or my points balance” (7%).

 

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Once millennials entered a grocery store, 58% said they use their mobile device while shopping compared to 42% who don’t. This was more prevalent among older millennials. 64% of them use their mobile device while shopping, compared to 47% of younger millennials.

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40% of those who used their mobile device in-store said they used it “to find coupons and compare prices.” Respondents also used mobile in-store to “consult shopping lists” (29%); “call or text another member of their household for information or recommendations” (15%); or “to find a recipe” (11%).

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When asked about apps or websites used at the grocery store, 31% of those surveyed said they used the store’s own app or website. 24% of respondents said they used general shopping platforms that aggregated multiple retailers, and another 24% spent their time on social networks, such as Facebook or Pinterest. Only 11% of millennials polled said they did not use apps or websites while visiting the grocery store.

“Mobile is an integral part of the millennial experience, making smartphones the perfect shopping companion for this group,” added Dermody. “Mobile is especially and increasingly seen as a key tool to drive store savings with each trip. We also saw that older millennials tended to use their phone more than younger millennials, perhaps indicating a more concerted effort to save among those most affected by the recession.”

When asked to identify what would most enhance their grocery shopping experience, 41% said they would like “offers, like coupons, sent to their smartphone when they enter a store.” 18% want “more self-serve checkout”; 14% want “in-store kiosks that offer product information or coupons”; 12% cited “the ability to scan an item on my mobile device to get more information about it”; and 10% said “mobile pay options at checkout.”

m-sur-12Conclusion

In closing, our data identifies a number of preferences among millennial grocery shoppers – but a reoccurring theme amongst them is cost savings. Post-recession, millennials continue to buy groceries but are committed to saving when they do, leaning heavily on mobile devices to enable and provide discounts. They are practical, savvy shoppers – and grocers need to take note in thinking through every aspect of their business plan – from product to sales to marketing.

It’s also important to recognize the differences within this large demographic segment, specifically between older and younger millennials. Those above the age of 25 had very different experiences of the recession than those below 25, and it has impacted the ways they shop – especially with mobile devices. Retailers often consider millennials as a homogenous group, but their marketing and mobile strategies could benefit from a more nuanced approach.

 

About Retale

Retale, a Bonial.com Group company, is the leading U.S. location-based mobile and digital company that conveniently connects shoppers with their favorite retailers and brands locally. By seamlessly delivering interactive ad content from hundreds of top-line retailers to mobile audiences, Retale has become the shopping information destination for millions of consumers.

 


1 http://www.forbes.com/sites/danschawbel/2015/01/20/10-new-findings-about-the-millennial-consumer/#2b02475128a8

2 http://www.nielsen.com/us/en/insights/news/2014/five-years-later-us-consumers-cautiously-leave-the-shadow-of-the-great-recession.html

3 http://www.nielsen.com/us/en/insights/news/2015/millennials-at-the-mall-what-factors-drive-young-consumers-retail-decisions.html