Young, urban and free to spend. (2024)

Young professionals in urban areas have plenty of disposable income, but are they spending it in supermarkets?

Picture this: A shopper who buys foie gras and freshly squeezed orange juice; who spends $4 for a bag of blue potato chips; who isn't fazed by price, even if she's down to her last few dollars before payday. Think that kind of shopper only exists in your dreams? In fact, she's everywhere, shopping in your store and in your competitors'. She's Joanne Jordan, Chandra Czape, Emily Spencer, Chris Yuzeitis and thousands of others. What do they have in common? They're young, self-indulgent, interested in experimenting with food--and often overlooked by supermarkets.

These young professionals are part of the Generation Formerly Known as X, a group spanning ages 23 to 35. By some accounts, they have disposable income in the area of $125 billion to $150 billion, spending a total of $200 billion annually. But are they spending their money in supermarkets? Perhaps not. "The current supermarket model is badly broken and incapable of attracting Generation X," says Burt Flickinger III, managing director, Reach Marketing, Westport, Conn.

At the supermarket, these professionals may be getting lost in the shuffle of generations. Positioned between baby boomers and Generation Y, their numbers may not attract the serious attention of grocers, as they only make up about 16% of the population. "Although no one scoffs at 20 million customers, the problem with all businesses is that they never got a good feel for Generation X because of the mis-stereotypes," says Michael Blackstone, president, Gen X Press, Baltimore, Md. "So a lot of businesses decided not to concentrate on this market, and Gen X slipped through the cracks. In terms of power, they are a sizable market. Are they going to shut a company down? Probably not. Certainly, different companies have learned from Generation X in order to better target Generation Y."

Although their numbers aren't as large as other groups, Generation X professionals may be a more reliable market than baby boomers or Generation Y, some observers believe. "Baby boomers are being carried out in coffins every day," says Flickinger. "Generation Y are not loyal supermarket consumers. There's a real need [for supermarkets] to replace their consumers with Generation X and multi-cultural consumers. And supermarkets are doing a horrible job marketing to both."

Generation X professionals represent an attractive target market for supermarkets because of their profitable combination of high disposable income and experimental nature. "Why write an entire generation off?" asks David Morrison, president and founder, TwentySomething Inc., Radnor, Pa. "It's an immediate gain to the bottom line to add this market, as they are highly experimental. You're talking about people that have really high discretionary spending, don't have kids right now, may or may not be married and are self-indulgent in whatever way they can. They work long, hard hours in a very unfriendly work force. Whether eating out or in, this market is predisposed to try and spend money on new foods."

Now is the time to reach out to young professionals, observers point out. "The current Gen X consumer, to paraphrase Jerry Kempf [former senior vice president of merchandising for Fleming Cos.], doesn't know how to make a tuna sandwich let alone a tuna casserole. And they will raise their kids to bypass supermarkets the same way that supermarkets bypassed them," says Flickinger.

In the early 1990s, marketers tried to get a handle on the approaching "twentysomethings" by applying stereotypes such as grunge, non-mainstream, negative and pessimistic slackers. "These labels are not all 100% false," says Blackstone. "But the problem came when they used each by themselves, rather than wondering why this generation seems to have a negative outlook. At the time, no one took into consideration the effect of great downsizing with the first latchkey generation. So they missed the mark on targeting their products and services through a unique message."

Retailers and suppliers have discovered that an entire generation can't be neatly packaged up with a bow and a label. "It's dangerous when we try to create generalized answers to diverse population groups like Gen X," says Michael Sansolo, senior vice president, Food Marketing Institute (FMI). "It's not the generalizations. It's understanding the local niche markets that you have to deal with. People live for what values work for them. If we try to create one solution with Gen X, we will create a losing solution. We have to make sure that we're understanding the different value propositions of the folks in that generation." (For a look at how some Gen X consumers view supermarkets and food shopping, see sidebar "Young adults speak out.")

One problem with understanding these consumers, observers note, is that they are caught in a time warp of sorts. While many never resembled the early stereotypes, they are still viewed by some retailers as rebels. The fact that often gets overlooked is this group's close relationship with their parents and their culture, For example, there's been huge interest among these young consumers in swing music, notes Judith Langer, president, Langer Associates Inc., a New York, N.Y.-based qualitative research and trend consulting firm. "For a long time, Gen Xers have felt they were living in and growing up in a troubled world, and that life used to be nicer," says Langer. "They think there's was an elegance missing. Gen X is fed up with the grunge image and wants something nicer."

This fact is often reflected in their approach to work. According to Walker Smith's "Rocking the Ages," twentysomethings want a better balance of time at home and at work. While boomers wanted a killer job, Gen Xers want a killer life, financed by their job. "The recognition of Gen X values might be more evident in the workplace than as shoppers," says Sansolo. "Supermarkets don't marker to the whole generation; they market to their locality. If you're listening to Nirvana but still buying groceries, does it really matter to the grocery store? Nor really."

A generation that listens to both Nirvana and swing music is tough to define. In Neil Howe and William Strauss's book "Generations: The History of America's Future 1584 to 2069," Generation X consumers are labeled as "reactive." Their behavior has been tangibly shaped by divorce, diversity and declining incomes, note the authors. As a result, they are putting off marriage, turning into designated decision-makers for their extended families, and are more accepting of racial and sexual diversity and distrusting of institutions.

However, there also may be a certain dichotomy at work. "Right now, this is a generation tom between two life stages in transition" says Stephen Kraus, partner, Yankelovich Partners, San Francisco, Calif. "If supermarkets are looking at Generation X, they will have to look at both segments of young singles and young parents. Both groups will aspire to traditional ends but are open to non-traditional means to get there."

While trying to get a foothold in the real world, many young professionals exhibit cocooning tendencies at home. They often favor meal delivery rather than cooking meals--or grocery shopping--for themselves. "Specialty gourmet in the big cities is key with this market," says Morrison. "They are physically exhausted so they buy dinner on the way home, watch television and detox with a nice meal and maybe some wine."

While they may order out during the week, many young urbanites are cooking on the weekends. "They want convenience," says Sansolo. "They still want to prepare the meal but have certain steps removed from particular products. How can I cut the amount of time and effort that I need to prepare the meal? In a contrary trend, gourmet cooking stores and magazines are extremely popular in urban centers."

When they do visit the grocery store, twentysomethings appreciate anything that will speed up the process. "They are very much a multi-tasking generation," says Kraus. "They engage in commando shopping--you get in and out. Grocery stores are not the place for browsing because [these consumers have] got a million things going on in their lives."

Most exhibit little loyalty to a particular grocery store. They select them primarily based on location. In urban areas, the closer grocery store translates into fewer sore muscles from carrying the groceries home, regardless of price savings. "They view supermarkets almost like a commodity, like their Visa card," says Blackstone. "There's nothing special about it. It's just right around the corner."

Young professionals are migrating to non-traditional grocery avenues, such as online, specialty retail, dominant big-box and small-box formats, says Flickinger. Dominant big box refers to retailers such as Costco, Sam's Club, Wal-Mart and Petco, favored by Gen X professionals for their value and savings, while small box encompasses companies such as Trader Joe's and Whole Foods. "There's very little innovation in retail to attract them," says Flickinger. "Most Gen Xers have disposable income, but they're bankrupt in time so they buy meals at vending machines and quick-serve restaurants, frozen food at mass-volume clubs and fresh food at category-dominant green grocers like Fairway, Produce Warehouse, Wild Oats or Whole Foods."

For those bankrupt in terms of time, online shopping may be a solution. And for a generation that was the first to grow up with computers, the idea of online shopping is not as frightening as it may be for older generations. In October 1999, Greenfield Online, Wilton, Conn., reported that Generation X is doing the most buying online. "Here's your first generation to use that type of service," says Blackstone. "I don't know that I'd go out on a limb and say that Generation X is going to fully embrace that technology, as far as grocery stores are concerned. However, they're an excellent market to test that technology on." (For more on this, see "Reality bytes," page 12.)

However, others expect that it will ultimately be Generation Y that takes the lead in Internet shopping. "Gen X isn't really the Internet generation but the TV generation," says Kraus.

Many twentysomethings are open to an earthy, healthy lifestyle, regardless of where they buy their groceries. "Any natural food store will probably be successful with this market," says Blackstone. "But I honestly don't think they'll overtake your run-of-the-mill supermarket. At this stage, cost is still a big deal."

Young urbanites are also bypassing traditional supermarkets in favor of restaurants. While many tend to brown bag it for lunch, they eat out for dinner more than other age groups and spend more money per visit than other restaurant patrons, reports NPD CREST, Rosemont, Ill., which tracks restaurant usage.

Whatever the restaurant format, these consumers prefer Mexican and Asian food, hamburgers or sandwiches, according to the National Restaurant Association. And this market is more likely than other consumers to eat finger food side dishes and appetizers, such as nachos, bagels and french fries. While young urbanites may like to do some gourmet cooking at home, they seem to prefer less formal, more casual and convenient types of menu items at restaurants.

These items, particularly ethnic foods, also end up on their grocery lists. "There is more diversity amongst Xers," says Kraus. "We see this reflected attitudinally in their tolerance and acceptance of lifestyles. This ties into the idea of novelty--looking for things they haven't seen before. In our data, we're seeing the boredom boom. People feel like there's nothing new out there despite more products in the marketplace."

This actually may be good news for grocers, because young workers are willing to experiment with food products. However, they also want quality and consistency. "You have one shot with this market," says Morrison. "The minute you blow consistency, you blow repeat sales. They are definitely reading the labels. If a 'healthy' drink has sugar and corn fructose, you have a problem there because your positioning is diametrically opposed and is compromised by your actual ingredients."

Gen X professionals also rely on familiar microwave foods, such as veggie burgers, soft pretzels and frozen meals. Other favorites include convenience-oriented products such as packaged salads and salads from salad bars, as well as wine and specialty beers. Buying food in bulk with roommates or friends is another popular option.

Childhood comfort foods also show up on their shopping list, according to NPD's National Eating Trends (NET) Report. Among the favorites are presweetened cereals, toaster pastries, canned pasta, peanut butter and jelly, whole milk, fish sticks, cupcakes and macaroni and cheese.

"These are people working, and it's a rough world out there right now," says Morrison. "They've emerged from that lovely cocoon of college. So nostalgia reminds them of better times when mom took care of them. It allows them to detox even faster. There are certain connotations with some brands that trigger off links and nodules of consumer behavior. And bam, they're 11 years old again and life is better."

Observers note that one key to developing brand or store loyalty among Generation X consumers may be this connection to childhood. "Maybe the easiest way is through their childhood, through happy thoughts and exciting things," says Blackstone. "That works well with all generations but is a huge key to success with this one."

In marketing to young professionals, retailers can tap into the idea of nostalgia with their marketing efforts as well. Industry experts point to successful examples such as Burger King and Gap. "It's the hot thing right now to make them feel connected. It is a huge success," says Blackstone.

Many retailers are hesitant to market to twentysomethings because this group is so media savvy. Growing up watching hundreds of thousands of TV commercials may have left these consumers particularly quick to spot hype, insincerity, overstatement and hypocrisy. As a result, they tend to prefer an image of a lifestyle rather than someone hawking products.

Observers note that this group is more likely to respond to mobile media, rather than a weekly circular. "Marketing has to be on land, on air and online to reach Gen X consumers' ears and eyes," says Flickinger. "Supermarket chains are very slow to capitalize on the power of their website propositions. The supermarket marketing directors and advertising agencies have done a poor job in targeting Generation X. As a result, they are sabotaging the supermarket chain's success in the future by not reaching a critical constituency."

By reaching young urbanites over the Web, retailers can provide shopping ideas, savings and build relationships through e-coupons and e-mail notices of savings. "It opens up a whole new world with the Internet. Everything takes on a new magnitude," says Karen Koslow, senior vice president, Marketing Drive MGR, Wilton, Conn.

Young professionals also have proved to be a strong constituent for loyalty programs. "This market loves the equivalent of frequent flier miles," says Morrison.

Frequent shopper programs also offer retailers the opportunity to learn more about this demographic, notes Paul Strzelec, vice president marketing, BAV Software, Washington, D.C. "Often times, the people making business decisions are projecting their own beliefs on customers, without the data integrated in their day-to-day systems," says Strzelec.

Taking advantage of loyalty card information can be crucial for supermarkets in developing and maintaining a connection to the Gen X market. "Supermarkets can build a relationship with young people by making the market relevant to their lives," says Koslow. "Then, when they move through various life stages, the grocery store will still be relevant to them. It's not, 'My mom shopped at A&P so I will, too.'"

Cause-related marketing may strike a chord with this market. "Grocery stores need to be community centers," says Flickinger. "There has to be a message of fresh, of fun and of community involvement in a meaningful and relevant way. This can be done in a visual, headline format for a consumer raised on remotes who likes to click and scan,"

Indeed, these consumers also like to have fun, note some observers, and will respond to such overtones in marketing and advertising efforts. Great venues to do this, says Flickinger, are entertainment, concert and athletic events on campuses and in cities.

Some supermarkets are finding success by tailoring certain marketing efforts to a younger market. In the Georgetown section of Washington, D.C., notes Morrison, several small supermarkets offer shopping nights for singles. "It's a clever way to target people since there's a high concentration in that market," he says. "Beyond that, most are doing a really crappy job in terms of the overall supermarket industry. If supermarkets target Gen X professionals, they can expand their market and still retain their core customer base."

Other experts suggest radically changing store formats to more effectively market to the upcoming generations. "To attract Gen X, supermarkets have to blow up their current formats," says Flickinger. "They need more women and multicultural officers and a much more entrepreneurial spirit in e-commerce. They have to have smart young people helping to design a format of service, carry-out, restaurant-quality food, an entertainment department, financial and travel services and an eye care department. It needs to be one-stop-shopping with a fresh foot-print."

Kraus also predicts some changes in format as retailers attempt to appeal to this and other future generations of shoppers. "Grocery stores will get smaller," he says. "The perimeter will stay but those products in the interior will go online and become smaller in the store. We've seen in this generation an interest in smaller stores with better service."

Langer notes that these consumers like to be left alone while shopping, which may lead to a greater number of kiosk-type machines that are designed to eliminate the need to talk to human beings. Instead, shoppers can use the machines to access information about product location, calories and menu planning. (For more on in-store kiosks, see "Customer service: The high-tech touch, page 59.)

Generation X consumers also may expect a different type of home interior in the future. The design of kitchens, for instance, may become more about heating, stirring, packing and less about creating. "These consumers are very pragmatic and utilitarian," says Kraus. "If something saves a step and has a tangible benefit, they are open to it."

Young adults speak out

Megan Ladage

When I moved to Chicago, my parents filled my refrigerator with tons of groceries. Within a week, I had a refrigerator full of rotten food. Since then, I have learned to shop frequently and conservatively. It's difficult to stay a step ahead in the spoilage game, but products such as frozen dinners, packaged salads, mini-sized cans of fruits and vegetables and 10-minute pastas help the cause.

How do other young urban consumers feel about food and grocery shopping? Here's a sampling of opinions:

"As a 29-year-old Manhattanite, I spend an outrageous amount of money, as do all of my friends, on groceries. Money is no object in the supermarket as far as I am concerned, If I want foie gras, I get it. I don't blink an eye at a $4 bag of blue potato chips, even if it might be my last $4 before payday. I never question a price or deprive myself in the market. I work long and hard, which means convenience and rewards come at no expense. And I know this philosophy is shared in my demographic because I see it everywhere among my peers. Water, cheese, cereal, high-ticket items such as freshly squeezed orange juice or pistachios are not considered treats to us, they are considered a necessity and are not given a second thought. My purchasing power is merely based on my whim or fancy at that given moment before I enter the store." -- Joanne Jordan, 29, public relations manager, Restaurant Associates, New York, N.Y.

"I have actually been going to the grocery store more than ever lately. I'm trying to save money by not buying lunch at restaurants every day. I usually get either a sandwich from the grocery store deli or some kind of frozen thing like Lean Cuisine and some frozen vegetables that I can microwave at work. As for home, we've been cooking dinner a lot more often that we used to, so I have been buying mostly basics like meat, fruits and vegetables, pasta, milk, etc. Saving money on food equals more money for fun stuff." -- Female, 25, assistant at New Line Cinema, Los Angeles, Calif.

"First off, I hate grocery shopping, because I have to do it. I work full-time and then some and have a million other projects/obligations going on, so time is definitely an issue for me. My husband and I 'plan' a menu on Sunday and go that evening for the entire week ahead. I usually buy what I want, specifically along the lines of fresh produce, regardless of the price. I don't think I would ever get into buying online unless it was staple foods, then maybe I would consider it." -- Kara Schaefer, 27, financial analyst, insurance firm, Fayetteville, N.C.

"I really only shop at grocery stores that have a wide variety and good selection of organic and/or natural food products. I don't feel I am persuaded very much by advertising on television or in the Sunday newspapers, because I usually make a list of what I need before I go, so I don't have to spend more time than I have to browsing around. My grocery shopping experience has changed dramatically since moving from the Midwest, because the Midwest doesn't offer a lot of variety of products in the chain stores. A variety of ethnic food markets is also lacking in general in the Midwest. I guess I am lucky that Boulder offers a wide variety and selection between ethnic markets, food markets and organic/whole-food stores." -- Emily Spencer, 25, natural resource specialist, Boulder, Colo.

"I do not like going to grocery stores at all. It is a big waste of time and effort. I would like to order my groceries online and have them delivered to my house. I would be willing to pay 10% to 20% more for the convenience of not having to waste an hour to two in a store full of mothers lugging their kids around and counting coupons for all of eternity at the cash register in an effort to save 12 cents on disposable diapers and off-brand toilet paper." -- Male, 27, government official, California

"Price is definitely an issue with me. When I buy things for myself, they are usually beauty products. When I buy these, I am more willing to spend more money than I am on food. I also hate those places like Meijer that are so huge. It is so difficult to find anything, let alone quickly." -- Stephanie Cason, 23, kindergarten teacher, South Bend, Ind.

"When I go grocery shopping, an event that I procrastinate, I don't set any type of budget. I buy what I want and don't make a list. I prefer smaller grocery stores, always purchasing quality over quantity. I would love to try shopping for groceries online but haven't heard of any type of service here in Honolulu. When you are part of a dual-income couple that puts in long hours at work, you really value your free time. You don't want to spend that free time at the grocery store." --Female, 26, sales and marketing executive, Honolulu, Hawaii

"I'm a foodie so I'm probably not your typical grocery store shopper. I'm always throwing dinner parties for friends and making all kinds of different foods. I prefer going to this market called Gourmet Garage that has loads of fresh vegetables, fruits, flowers and herbs of excellent quality at a reasonable price. They only sell their own products and no non-grocery items. They have all the essentials and even some more exotic stuff. Everything from risotto to chickpeas to fresh vanilla bean. They even make their own granola, which I eat every day for breakfast." --Chandra Czape, 25, features editor, YM magazine, New York, N.Y.

"I don't even think about what I'm getting until I get there. I like to try random things, especially if the packaging looks good and appealing. I think most stockers don't know what they're doing. They don't seem to know much about the products, are not helpful and aren't trained as sales people who can give information on products--it's just price with them. But I don't like to talk to people who try and persuade me on what to buy, either." --Male, 25, client sales officer, Morgan Stanley Dean Witter, Chicago, III.

"I don't really go to the grocery that much. I don't cook much, either. I buy mostly cereal, milk and breakfast stuff. I also buy chicken in every way, shape and form. Finally, I go through about a case of co*ke each week. I know that these new mega-supermarkets have a great selection, but it makes grocery shopping such an ordeal. I actually prefer to run into a convenience store or drugstore to grab a few items. I only go to the grocery when I am absolutely out of everything." --Female, 23, student, Indianapolis, Ind.

"I think it is interesting how many things I can get done at the grocery store now in one trip--everything from cashing a check, to renting movies, to developing film. It is a wonderful time saver." --Female, 24, law student, Columbus, Ohio

"I like grocery shopping more than clothes shopping at the mall because most supermarkets are really well laid out. I can get in and out relatively quickly with ease of use. I like to shop in the produce, meat and frozen foods sections." --Chris Yuzeitis, 27, advertising account supervisor, Chicago, III.