••• real estate research
Prospective home-buyers leaning toward the suburbs
A shortage of single-family homes?
Over three-quarters of surveyed households would purchase a single-family home if they were to buy in the next six months and 79 percent of renters would choose to buy outside of an urban area, according to the second installment of the National Association of Realtors (NAR) quarterly consumer survey. The survey also found that confidence about now being a good time to buy is waning amongst renters, particularly in the West, where prices have solidly risen.
In NAR’s first-quarter Housing Opportunities and Market Experience (HOME) survey, respondents were asked about their confidence in the U.S. economy and various questions about their housing expectations and preferences, including a question on if they were to purchase a house in the next six months, what type of home and in what area would they choose to buy.
The survey data reveals an overwhelming consumer preference for single-family homes in suburban areas. Most current homeowners (85 percent) and 75 percent of renters said they would purchase a single-family home, while only 15 percent of homeowners and 21 percent of renters said that would buy in an urban area.
“The American Dream for most consumers is not a cramped, 500-square-foot condo in the middle of the city but instead a larger home within close proximity to the jobs and entertainment an urban area provides,” says Lawrence Yun, NAR chief economist. “While this is not a new discovery, supply and demand imbalances and unhealthy levels of price growth in several metro areas have made buying an affordable home an onerous task for far too many first-time buyers and middle-class families.”
According to Yun, it’s time for homebuilders to double their focus on constructing single-family homes. With Millennials increasingly buying in the suburbs – as NAR previously reported – tight inventory and affordability concerns will likely worsen without significant headways made in housing starts in relation to job creation.
Heading into the spring buying season, NAR’s survey found that compared to the December 2015 survey the same share of homeowners (82 percent) but fewer renters (62 percent versus 68 percent last quarter) believe that now is a good time to buy.
“A high number of homeowners are expressing that it’s a good time to buy and this sentiment is no doubt being fueled by the $4.4 trillion in housing equity accumulation in the past three years,” says Yun. “On the other hand, accelerating home prices and the perceived difficulty in obtaining a mortgage appears to be tugging at the confidence of renters.”
Overall, respondents over the age of 65, those living in the Midwest and those with incomes over $100,000 were the most optimistic about buying now.
Among current homeowners, fewer (56 percent) believe it is a good time to sell compared to the fourth quarter of 2015 (61 percent). Amidst steep price increases and tight supply, respondents in the West were the most likely to think now is a good time to sell, while also being the least likely to think now is a good time to buy.
Among all households in the survey, less than half believe the economy is improving (48 percent), down from 50 percent in last quarter’s survey. Renters, those living in urban areas and respondents with lower incomes were the most optimistic.
The HOME survey’s monthly Personal Financial Outlook Index of all households has slightly dipped (to 58.1) since December (59.6), but is mostly unchanged from March 2015 – reflecting stable confidence that respondents’ financial situation will be better in six months. Currently, renters, younger and lower income households and those living in urban areas are more optimistic about their future financial situation.
(The Index ranges between 0 and 100: 0 = all respondents believe their personal financial situation will be worse in six months; 50 = all respondents believe their personal financial situation will be about the same in six months; 100 = all respondents believe their personal situation will be better in six months.)
Across all age groups, when asked about their future buying preferences, survey responses were closely tied to each generation’s typical lifestyle, with younger buyers being more likely to consider buying a single-family home. Not surprisingly, renters and younger buyers would for the most part purchase larger homes, whereas older buyers would purchase similar or smaller sized homes.
Highlighting the apparent appetite for some older households to downsize and live in the city, respondents over the age of 65 were the most likely to consider a condo and nearly as likely as respondents under the age of 35 to consider purchasing in an urban area.
Most respondents indicated their preference to stay in a similar area to their current living situation if they were to buy in the next six months. Over two-thirds of those living in rural areas and 75 percent of those living in suburban areas would buy in a similar area. Only those living in an urban area would be more likely to move else-where, with a suburban area within 20 miles of the city being the most frequent choice of urban buyers moving to another type of area.
In January through early March 2016, a sample of U.S. households was surveyed via random-digit dial, including half via cell phones and the other half via land lines. The survey was conducted by TechnoMetrica Market Intelligence. Each month approximately 900 qualified households responded to the survey. The data was com-piled for this report and a total of 2,781 household responses are represented.
••• shopper insights
Millennial use of printed coupons on the rise
Affluents coupon too
As digital media and mobile use increase – particularly among Millennials – it is not at the expense of traditional media, namely print, according to the 2K16 Coupon Intelligence Report from Livonia, Mich., marketing firm Valassis. “Ninety percent of all consumers across a variety of demographics use print and digital coupons,” says Curtis Tingle, Valassis chief marketing officer. “What may be a surprise is that 83 percent of the influential Millen-nial generation used the same or more print coupons last year in addition to their increased digital coupon use. The key for astute marketers is to develop integrated print and digital coupon strategies to optimize consumer activation.”
The report’s findings include:
Print coupons are essential: 87 percent of all consumers use print coupons they receive in the mail; 82 percent of all consumers use coupons delivered via the newspaper coupon book; and Millennial use of mail and news-paper coupons increased more than other generations in the last year.
Affluent shoppers use coupons: Coupon use is not limited by income level, as even affluent shoppers ($100K+ household income) seek value when making purchases. The report found that 90 percent of affluent shoppers use coupons; and 76 percent of affluent shoppers only buy a product if they have a coupon, compared to 72 percent of all consumers.
Smart, brand-loyal shoppers use coupons: Coupons are a significant influence on brand loyal shoppers’ purchase decisions, impacting how they plan, where they shop and which brands they buy: 91 percent of brand loyal shoppers use coupons; and 78 percent are influenced to buy a brand they wouldn’t typically buy due to a coupon.
Coupons offer more than just a discount: Coupons impact the consumer’s entire buying decision process: 86 percent of all consumers use coupons to plan their shopping lists; and 77 percent of all consumers select their stores based on where they can use paper coupons.
A full copy of the report can be found at http://bit.ly/1MEP2eK.
••• food research
Consumers flummoxed by trans fats
What’s healthy and what’s not?
Nearly a year after the FDA mandated the removal of artificial trans fats from processed foods by 2018, a new consumer survey from Coast Packing Company, a Vernon, Calif., maker of animal fat shortenings, and Ipsos Research indicates many consumers remain confused about the entire subject of trans fats in the American diet.
The results confirm that there is a lack of understanding about trans fats among almost two-thirds of American adults: 64 percent either think that all trans fats are unhealthy (36 percent) or don’t know about the health as-pects of trans fats in foods at all (28 percent).
While almost five times as many respondents know that artificial trans fats in foods are unhealthy while natural trans fats are neutral to healthy (24 percent) – compared to 5 percent who incorrectly think that natural trans fats are unhealthy and artificial trans fats are neutral to healthy – the vast majority simply aren’t aware that there are different kinds of trans fats and that not all trans fats are toxic.
The survey of 1,000 adults, conducted in late February, examined awareness of trans fats in the American diet, specifically the differences between artificial trans fats – which are manufactured and added to food during processing – and those trans fats that occur naturally in foods derived from animals.
Because artificial trans fats have been linked to an increased risk of heart disease, the Institute of Medicine, a division of the National Academies of Sciences, Engineering and Medicine, recommends a trans fat intake as low as possible. In June 2015, the FDA made it official, determining that trans fats in processed foods are no longer Generally Recognized as Safe and ordering their phase-out within three years.
The FDA’s order does not extend to naturally-occurring trans fats – that is, fats found in foods derived from animals (eggs, dairy, beef, etc.) – which are considered safe. As the survey indicates, these natural trans fats are frequently confused with manufactured trans fats that are created by adding hydrogen to liquid vegetable oils to make them solid, often dubbed “artificial trans fats.”
“A great many consumers don’t understand the difference between artificial and natural trans fats because they simply haven’t been told,” says Eric R. Gustafson, CEO, Coast Packing Company. “Trans fats in processed foods have long been regarded, correctly, as a public health problem, but the discussion has rarely called out the distinction between toxic artificial trans fats and potentially healthful natural trans fats. Today, nutrition labels don’t make it clear, so it’s not surprising that confusion prevails in the marketplace.”
While 24 percent of the sample overall recognized the distinction between artificial and natural trans fats, for Millennials that figure rose to 37 percent – and just 19 percent of that group said they were unaware of the health aspects of trans fats. At the other end of the age spectrum, just 16 percent of those 55+ indicated they were aware of the difference between artificial and natural trans fats.
The Coast/Ipsos survey revealed a gap in awareness based on income: 40 percent of those with annual incomes above $50,000 regarded all trans fats as off limits, while just 30 percent of those with incomes of less than $50,000 did – a population that may well include Millennials. On a regional basis, 41 percent of those in the Northeast placed all trans fats on the do-not-consume list, versus 33 percent of those in the South. By gender, 10 percent of men overall saw no health issue with trans fats of any kind, compared to just 4 percent of women.
Families with children were marginally less likely to believe all trans fats are unhealthy and were more likely to know about the health aspects of trans fats in food. Education proved to be a differentiator as well, but perhaps not as anticipated: 43 percent of those with a college degree said that all trans fats are unhealthy, while only 30 percent of those without a degree held to that view – a disparity that nearly mirrored the results for those who are married (40 percent) vs. those who aren’t (31 percent).
In late 2015, a Coast/Ipsos consumer survey found that that younger Americans are more receptive to animal fats in their diet than their elders – and are eating accordingly.
The survey of 1,000 adults examined how attitudes about animal fats in the American diet have changed in recent years and how consumption patterns may be changing as well. Respondents were asked whether they were more or less open to animal fats and whether those views extended to actual behavior.
The Coast Packing/Ipsos study was fielded from February 25-28. Ipsos eNation surveys consist of a minimum of 1,000 completes with adults 18 years of age or older in the contiguous United States. The sample includes individuals selected from the online segment of Ipsos’ iSay/Ampario Panel and is balanced to be representative of the general population based upon region, gender, age and household income data from the U.S. Census Bureau. Results have a margin of error of +/- 3 percentage points.
••• shopper insights
General Mills team outlines c-store snacking trends
The meal-time blur
From natural to made-to-order, General Mills has pinpointed the hot snacking trends c-store retailers should be watching in 2016 in order to meet customer demand, as reported by Convenience Store Decisions.
The Consumer Insights team from General Mills Convenience & Foodservice analyzed the latest snacking data and convenience consumer behavior to uncover the top seven trends and opportunities for convenience stores in 2016 and beyond.
“This is such a dynamic time in c-stores right now as snacking and all-day eating become more prevalent and consumers seek out more from their snacks – from unique and unexpected flavors to customization to healthful benefits,” says Kelly Kees, consumer insights researcher at General Mills Convenience and Foodservice. “This new era of snacking presents a major growth opportunity for c-store retailers that offer the right snack options to meet the changing needs of today’s consumers.”
Following is a checklist of seven steps to help retailers leverage the new era of snacking.
Modern mash-ups: Snack foods and flavor profiles are mashing together. C-store shoppers, especially Millennials, are open to multicultural influence and are looking to mix and match flavors and cuisines, while still being grounded in familiar favorites. Some brands are venturing into different nuances of flavor, like smokiness and tanginess. Expand food-service with multicultural offerings, like samosas, egg rolls and quesadillas, or take a twist on current food-service items by adding exciting flavors such as wasabi or Sriracha.
Back-to-basics: Health-conscious shoppers are turning to healthier foods, many of which are high in naturally occurring fats, e.g., nuts, avocados and coconuts. High natural fat and protein are linked with satiety. Ensure store assortments include products with inherent protein that are high in natural fats, like nuts, seeds and jerky.
Make it mine: Customizable specialty beverages and made-to-order food-service allow shoppers to add their personal touch to food. Millennials especially like to put their stamp on their own creation, which they are willing to pay for. Give shoppers room to make their own food creations, for example, condiment or topping bars in food-service areas like roller grills and specialty hot beverages. Customization cues freshness because food and drinks are made real-time and “just for me.”
Fresh = real food: Temperature-controlled food, shorter date codes and words like “raw” and “simple” help cue freshness to shoppers, which appeals to consumers looking for less processed food. Expand refrigerated/fresh options and locate them near store entrances to alert shoppers to freshness. Offer more grab-and-go snack options, like cheese, eggs and fruit.
Transparency: Shoppers today are more concerned about what is in the food they eat. See-through packaging and clear ingredient decks with words they can pronounce give shoppers the label transparency they are looking for. Brands like Larabar feature simple ingredients that shoppers can understand while products like the Food Should Taste Good Real Good Bar have clear packaging to showcase the product’s wholesome ingredients. Offer a variety of products that include simple ingredients as well as clear packaging, which lowers risk for shoppers.
Shrinkage: Small, portion-controlled snacks allow shoppers to indulge guilt-free. Mini treats satisfy cravings, are portable, snackable and do not bust health goals, e.g., Pillsbury Mini bakery items. Tasty treats are not going away, so offer smaller portions or resealable packaging, which can encourage even the most health-conscious shoppers to indulge. Smaller treats also allow for easier sharing and snacking on the go.
Meal-time blur: Specific meal times are a thing of the past. Snacks can be meals and meals can be snacks. Hectic, on-the-go lifestyles result in more freedom when it comes to what and when we eat. Shoppers are more accepting of smaller, more casual meals, with half of adults replacing meals with snack foods three to four times a week. Be mindful of shoppers who may eat cereal at supper or hot dogs as a snack. Offer products or solutions that are flexible as a meal or snack option, hummus paired with pretzels and yogurt parfaits, for example. Merchandise similar snacks together to encourage bundling snacks to make a meal solution.
••• social research
Low-income households miss out on bulk savings
‘Poverty penalty’
Turns out you have to make good money to save money. That’s according to new research by Michigan Ross Professor Yesim Orhun, who found that people with low incomes are less able to buy in bulk and move purchases forward to take advantage of sales.
Using Nielsen data on toilet paper purchases, her study with Ross Ph.D. student Mike Palazzolo showed that while low-income households tend to buy cheaper brands to save money, a large proportion of that savings is lost because these households buy smaller package sizes (at a higher unit price) and don’t utilize sales as often.
Worse, the relative inability to buy in bulk and on sale has a compounding effect, exacerbating the “poverty penalty.”
“Because they have to buy small quantities, they have little inventory at home and can’t wait until a sale presents itself to purchase again, making it even harder to take advantage of sales,” says Orhun, professor for marketing. “It’s a double whammy.”
The researchers’ data shows that low-income households pay 5.5 percent more per roll of toilet paper than they would if they purchased more like high-income households – that is, if they bought in bulk and on sale more often. By contrast, low-income households save 11 percent on their toilet paper purchases by purchasing “cheap” brands.
Consequently, roughly half the savings low-income households reap by purchasing lower-tier brands is sacrificed because they struggle to buy in bulk and on sale.
The analysis also shows that it’s not simply a lack of knowledge or awareness of sales and bulk discounts that drives the problem. There is also a cash flow issue. When low-income consumers have more liquidity – after getting their paychecks, for example – they do take advantage of bulk discounts and sales.
“It’s not about poor people making poor decisions; it’s about them facing liquidity constraints,” Orhun says. “And it matters even for what we’d consider small purchases. Clearly, the government can play a role in easing liquidity constraint by making credit more accessible. However, government action isn’t the sole potential source of liquidity relief.”
Can retailers or manufacturers do anything about it? Possibly. Retailers could extend low-interest lines of credit to consumers for everyday items (like toilet paper). Manufacturers could offer promotions to encourage people to buy larger packages. This could also help lock in customers and help manufacturers avoid losing sales to brand-switching.