Retail Report: Online Reviews and Redefining Healthy

Redefining ‘Healthy’ in Consumers’ Minds

The fact that consumers have become more aware of nutritional issues isn’t in dispute: The International Food Information Council Foundation’s 2016 Food and Health Survey shows that 47 percent of consumers consult ingredient labels before buying a food, and one in four respondents has made changes to his or her diet over the past year.

What is less clear is how consumers understand the word “healthy” when it is applies to food. Not so long ago, a “healthy” food might be defined as something that was low in calories, sodium or fat. Today’s consumers, especially millennials, have different criteria, with minimally processed “whole” foods being in demand.

SmartBrief recently featured a story on “progressive” consumers who have become major influencers in the food industry. The author notes that these individuals take a holistic approach to food choices rather than buying something because it’s good for weight loss or blood pressure management.

According to the story, “From a purchase and use perspective, this means moving away from products that are fat-free, diet products or 100-calorie portion packs to kale, dark chocolate and quality fats, such as those found in nuts, avocados and butter.”

What more will consumers expect? Current reports show a demand for increased transparency in food labeling. Consumers want to know all the ingredients in a food, as well as the product’s nutritional value. Beyond this, it will be interesting to see if new discoveries in nutrition science trigger additional shifts in how people judge the value of the food they buy and eat.

Consumers Reach for the Stars When It Comes to Online Reviews

Two of the most significant shifts in consumer behavior over the past two decades have been the ability to review products online, and to read reviews from others before making a purchase. Recent studies on online reviews confirm their importance in consumer decision-making, reinforcing the need for suppliers and retailers to take customer ratings seriously.

How seriously?

RetailingToday recently reported on initial research performed by Consumer Affairs for Brands on how consumers use online ratings. Star ratings appear to be of significant interest to consumers, and the number of stars has a strong impact on whether the consumer actually makes a purchase.

According to the report: “The highest tier came from 4.5 stars, with 64.2 percent likelihood of purchase. The next tier was 3.9 to 4 stars, with 42.8 percent to 58.4 percent likelihood of purchase. One tier below that were 2.8 to 3 stars, with 22 percent to 41 percent likelihood to purchase. Another interesting finding is that while many of the units between 4 stars and 5 stars appear to overlap, it seems that 4.5 stars and 5 stars are materially different.”

Research on male millennials by WSL Strategic Retail reinforces the information gleaned from the Consumer Affairs for Brands study. Supermarket News reports that 50 percent of millennial men admit to “pre-shopping” for grooming products by searching out online reviews and other information, and these numbers have risen sharply over the past year.

“The 50 percent of the individuals who pre-shop men’s grooming products has risen 15 percent since the 2014 survey — one of the highest increases of any category covered by WSL’s research,” according to the report.

What does this mean for suppliers?

No. 1: They should pay attention to online ratings.

Also, they should take note of legitimate criticisms and improve products and work with retailers to ensure that products are stored properly and shipped in appropriate packaging to prevent the kind of damage that could trigger 1- or 2-star reviews.

Retailers Address Price Matching Challenges

Savvy consumers are often frequent users of retailers’ price matching and price protection policies. The ability to ask a customer service representative to match a competitor’s advertised price or to refund the difference when an item drops in price can represent huge savings for the budget-conscious.

Until recently, the bulk of the work required to match competitors’ prices or monitor price drops fell to the consumer. It was up to him or her to monitor websites and printed advertising circulars to learn when an item went on sale or an online retailer dropped its prices.

Eventually, however, technology caught up. Price comparison sites abound, as do services such as CamelCamelCamel.com, which monitors Amazon’s dynamic pricing and alerts consumers to fluctuations. Walmart even began to offer Savings Catcher, a price matching feature which is integrated into the retailer’s mobile app.

Now services like Earny and Paribus have taken things one step further by automating price protection refund process. These services monitor consumers’ accounts with various online retailers along with the retailers’ pricing. When a price drops, the service sends an automated email to the retailer requesting a refund.

All these changes may have proved to be a bit much for retailers, who are now tightening the reins on both price matching and price protection. For its part, Walmart recently announced that it was suspending traditional price matching at 500 of its stores. Consumers can still use Savings Catcher, but it’s no longer possible for customers at these stores to ask the cashier or manager to match a competitor’s price.

The situation with Amazon is perhaps more confusing. Over the past week, several news outlets have reported that Amazon is not only refusing to honor price protection requests, its spokespeople are insisting that Amazon never had a price protection policy, except on TVs. Many consumers are crying foul, insisting that they have received price protection refunds from Amazon in the past.

Why is all this happening?

Some analysts suspect that third-party price matching/monitoring services may be cutting too deeply into the bottom line of some retailers without providing additional value in the form of consumer information.

Taking the price matching “in-house,” as Walmart does, allows the retailer not only to access significant consumer data but also to control how the savings are refunded. Unlike traditional price matching, Savings Catcher doesn’t reduce the price that a customer pays at the register. Instead, any savings are added to a Walmart gift card that the customer can use at Walmart on a later date.