Researcher details forces behind consumer choice

Filed under: Retail |

At the Institute of Food Technologists show, Harry Balzer, vice president of market research firm NPD Group, offered several insights about American eating habits.
Whatever consumers say they are doing when it comes to making food choices, their actual eating habits reveal something very different, Balzer said.
Americans’ eating habits are slow to change, and for the most part any changes are simply extensions of previous trends, he said.
What this boils down to in practical terms is a willingness to try versions of familiar products, such as different beverage flavors, he said.
Food and beverage manufacturers therefore must pinpoint what Americans eat most and develop versions of these, which can involve new flavors, new benefits or even new packaging.
American’s will put chicken at the top of the list, followed by sandwiches. The most popular breakfast items remain coffee and cereals, with yogurt growing in popularity despite not being a traditional option for breakfast, according to NPD figures.
But the true forces behind consumer choice remain convenience, price and freshness, said Balzer, and these are likely to affect the long-term performance of any products brought onto the market.
“For example, cereal at one time was a convenient, hearty, healthy breakfast,” he said. “But because of modern-day time constraints, it’s just not as convenient as it was perceived to be 20 years ago, primarily because it can’t be eaten on the go.”
Cereal bars went part of the way toward addressing this concern, but consumers need a “fuller” breakfast, he said, adding that one way to make cereal an on-the-go item is to serve it with yogurt instead of milk. This is already being seen in certain restaurants, but the key is to market the product as a cereal rather than as a yogurt.
And when it comes to sandwiches, which have seen “outstanding growth,” the opportunity is to make the ingredients fresh.
“When it comes to health products, manufacturers were looking for an avenue of growth,” Balzer said. “And people try them, they just don’t stay with them. Americans just want the latest way to deal with health. Every food and beverage category has a healthy counterpart, but these have never overtaken the regular varieties.
“In my opinion, manufacturers should offer healthier products within their product lines, but they should realize that ‘healthy’ for the most part is about ‘new.’ They should have a line-up of different products for this category, and as soon as one starts to weaken it should be pulled off and the next one put in its place.”

L’Oreal wins FDA approval for sunscreen

A sunscreen, used for years overseas, has been approved for use in the United States. It contains an ingredient that blocks the type of ultraviolet radiation linked to some cancers.
The Food & Drug Administration’s approval of the sunscreen could give L’Oreal a lead over U.S. rivals. The over-the-counter sunscreen was launched 15 years ago in Europe and distributed by L’Oreal’s European marketing partner LaRoche-Posay under the name Anthelios SX.
It contains Mexoryl SX, an ingredient patented by L’Oreal that is widely cited by dermatologists as effective in blocking UVA waves. The ingredient, ecamsule, blocks UVA rays, which penetrate deeper than UVB rays associated with more common sunburns. Though their effects are less immediately obvious, UVA rays can cause deeper, longer-lasting damage by destroying collagen and other proteins that keep skin firm and elastic.
Other sunscreens protect against UVB rays and claim at least some degree of protection against UVA rays, but their performance has come under growing scrutiny after several lawsuits charging the products don’t work as advertised.
In May, a California Superior Court judge consolidated nine individual lawsuits into a single case against five major sunscreen marketers — including Schering-Plough (Coppertone), Playtex Products (Banana Boat), Neutrogena and Hawaiian Tropic.
The FDA recommendeds using sunscreens, but also limiting time in the sun and wearing protective clothing.

Revision of lease accounting standards

The Financial Accounting Standards Board, which sets U.S. accounting rules, plans to revise its existing standards for leases. The review is being conducted to ensure that transactions are presented transparently and usefully to investors in retailers’ financial statements, the organization said.
The review will be conducted jointly with the International Accounting Standards Board.
The current U.S. accounting standard regarding leasing was established in 1976. Lease arrangements have evolved considerably during the past 30 years and the standards are outdated, say proponents of the revisions. Current accounting standards make it possible for retailers to structure lease transactions to achieve desired accounting outcomes, observers say.
The first step will involve the creation of a panel whose members have knowledge and expertise about a wide range of leasing arrangements. The FASB and IASB intend to present revised rules for lease accounting to their members for review by 2008.
Revised rules will likely require retailers to recognize leases on their corporate balance sheets, observers say. Several retail chains face large leasing accountabilities as a percentage of their market capitalization, according to a report from Credit Suisse. These include Office Max, CVS, TJX Cos., RadioShack, Safeway, Gap Inc., Limited Brands and Office Depot.
Joan Johnson covers retail for the Colorado Springs Business Journal.