Pasta marketers encouraged to 'push the right buttons'
April 9, 2013
by Eric Schroeder
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PALM BEACH, FLA. – Pasta companies looking to drive change and growth at retail should look to several retail “hot buttons” for guidance, including price and value, identifying convenient consumer solutions and providing a “cool” factor, said Todd Hale, senior vice-president of consumer and shopping insights for North America at Nielsen Co.
In a presentation April 9 at the National Pasta Association meeting in Palm Beach, Mr. Hale described retail “hot buttons” as areas where retailers are specifically putting a lot of focus today. He encouraged the N.P.A. and its member companies “to get behind some of these moves” to drive engagement with shoppers and brands.
Mr. Hale said the move by retailers in the consumer packaged goods industry toward value “really continues to resonate with shoppers.” With traditional supermarkets shrinking, the retailers that are winning are those focused on either the high end or the low end, he said.
“As a manufacturer, you need to think about where you place your bets,” Mr. Hale said. “And right now, those retailers serving the high end and low end are winning. The middle is really getting squeezed.”
He added, “When you look at median income households in this country it has declined in 9 of the last 12 years. The more we see income decline the more pressure we put on consumers on their ability to pay for products. This situation is not likely to improve anytime in the near term.”
As a result, he said companies have done a decent job of trying to attract the lower-income consumer with down-sized products. Grocers also are addressing this trend with new outlets focused on lower prices.
Another hot button trend is the offering of convenient consumer solutions, and Mr. Hale indicated that e-commerce, driving about 11% growth year-over-year, stands to win over the next five years. Pasta could benefit from that trend, he explained.
“Your category, quite honestly, could be one of those categories that is ripe for more focus on e-commerce,” he said. “Now unfortunately, when you go e-commerce, what happens? Prices get lower. Amazon could care less about making big money. They make small margins. They want to take cost out of what they do, and deliver more value to their shoppers.”
The idea of “food fight” is another area of importance in the market, Mr. Hale said. For example, more retailers are adding more fresh products in their stores. Pasta companies should look for ways to capitalize on this trend as well, he said.
“How do you get a right balance across the store and how can you help your retailers with that balance,” he said. “And why don’t we see more pasta in the perimeter of the store? Why isn’t there pasta in the meat section where people put together meals around both? So, we think there is opportunity for categories like yours to find more secondary locations.”
It also will be critical for industry to connect with shoppers that matter, especially in light of the changing face of the typical American consumer, Mr. Hale said.
“If you are not thinking about how you connect with either African-Americans or Asians or Hispanics you are going to miss out on a huge opportunity, and it’s going to be with us for a long time,” Mr. Hale said. He added that capturing millennials also will be important, as will tapping into the boomer market.
Other “hot buttons” Mr. Hale identified were: private brands; right-sized box, i.e., stores like Whole Foods and Target introducing smaller store formats; health and wellness; and experiential retailing.
In terms of experiential retailing, Mr. Hale encouraged the pasta executives in attendance to consider creating excitement by adding a “cool” factor.
“I think you have a fun category … so how do you add more coolness?” he said.
Concluding his remarks, Mr. Hale indicated the task of driving change and growth won’t be easy, but is doable and promises significant payout.
“This economic divide remains out there but we think there are opportunities to attract both high and low income and the middle, but you’re going to have to work a lot harder at it,” he said. “Competition has really heated up. These hot buttons around value, the right-size box, this food fight, this private brands versus brands, how do you engage shoppers and consumers and retailers with your categories to help retailers and yourselves win. And finally, when you think of retailers in 2017, it’s going to be on-line versus brick and mortar. You need to really innovate to stay consumer relevant. You need to innovate and win with cool. I think you have a category to do that.”