Study determines transparency yields greater brand loyalty
86% of shoppers agreed that if food manufacturers or retailers provided access to complete and easy-to-understand definitions for all the ingredients, it would result in more trust.
Grocery shoppers exhibit loyalty to those products that create deeper relationships through information exchange, according to a new report released by Label Insight, St. Louis, Mo., and Food Marketing Institute (FMI), Arlington, Va.
The study, “The Transparency Imperative,” reveals that 75% of shoppers are more likely to switch to a brand that provides more in-depth product information, beyond what's provided on the physical label. When shoppers were asked the same question in 2016 in a similar study by Label Insight, just 39% agreed they would switch brands.
FMI, with support from Label Insight, developed this report with the goal of defining what transparency means to shoppers and how it impacts their food retail purchases. The study further delves into attitudes and behaviors among health-conscious shoppers, those who are digitally engaged, and reveals how consumers respond across generations. Recognizing these consumer audiences, the report recommends the necessary steps brands should consider to further embrace transparency:
- Relay information beyond just ingredients.
- Understand the specific needs of key shopper groups.
- Meet the increased expectations of online shoppers.
- Track changing consumer preferences as this trend progresses.
In the report, 86% of shoppers agreed that if food manufacturers or retailers provided access to complete and easy-to-understand definitions for all the ingredients, it would result in more trust. Nearly as many shoppers (80%) said they are more likely to be loyal to a brand that provides more in-depth information, beyond what is provided on the physical label. More than half of shoppers (54%) are even willing to pay more for a product that has additional product information.
"The new shopper mindset requires brand owners to think about their products well beyond the traditional label and respect a more digitally-minded consumer," says Doug Baker, vice president, industry relations, FMI. "The study offers several considerations for how to make the best use of these findings, but overall, they require companies to recognize and communicate the importance of transparency and perform a thorough review of their unique consumer audiences and commerce channels."
What is transparency?
The vast majority of consumers (69%) say it is extremely important or important that brands and manufacturers provide detailed information such as what is in their food and how it is made. Interestingly, online shoppers (80%), college graduates (76%) and higher grocery spenders, as in $125-plus a week (75%), were more likely to agree with this sentiment.
When asked to further define what elements define transparency, older generations (Baby Boomers and Generation X) are more likely than Millennials to focus on a complete list of ingredients, ingredients descriptions and nutritional Information. Millennials also focus on these indicators, but are more likely than older generations to look at allergen information, certifications and claims, explanations of ingredient usage information and other details such as animal welfare, fair trade and labor practices.
"We titled this report The Transparency Imperative because as we executed the research to bring the key findings of our 2016 studies current, we see clearly that transparency is only becoming more important to consumers," says Patrick Moorhead, chief marketing officer for Label Insight. "Their attitudes and preferences, particularly with the growth of e-commerce, make it clear that transparency is critical to growth and our industry must take action."
Meet the health-conscious shopper
Nearly half (47%) of American households have someone on a diet or following a health-related program. These shoppers are even more likely to place a premium on transparency – 61% will pay more for products that offer in-depth product information vs. 54% of general shoppers. When a label is not sufficient, these shoppers (89%) are very likely to seek out information elsewhere. Nearly half of this segment (47%) would be very likely to use a smartphone in store to find additional information beyond what's available on the label and the shelf.
The study also found that the presence of children in the home increased the desire for transparency. Shoppers with children are more likely to place greater importance on ingredient information, nutrition and health benefits. They were also particularly likely to find value in accessing detailed product information in store on their smartphone (87%) and to use this method (85%).
Grocery e-commerce increases transparency expectations
The study found that 26% of shoppers purchased groceries online in the last 30 days. Yet, this group represents a valuable demographic – they are more educated, have higher household incomes and more likely to have children under the age of 18. While Millennials are disproportionately shopping online, they only make up 39% of online shoppers. Generation X (30%) and Baby Boomers (23%) also represent a significant portion.
Seventy-six percent of online grocery shoppers expect more product information when shopping online than if they were in a physical store, and 72% believe that getting product information is even more important when shopping online. Additionally, 81% are willing to switch to a brand that provides more in-depth product information, compared to 75% of general shoppers.
This research is based on an online survey of a random sample of 2,022 U.S. grocery shoppers 18 years of age or older. The research was conducted via an online nationally representative sample from May 15-22. Quotas were established to ensure that survey respondents were representative of the U.S. population by age, region and gender. Details of key demographics and a shopping profile can be found in the Appendix of the report.