Food Retailers: Meet the "Hybrid Consumer"

If grocery stores haven't heard of the "hybrid consumer", they should pay attention. Less interested in mid-market products, these customers are engaging in some bipolar activity: both trading down on basic groceries and spending their dough on high-end products like premium brands in supermarkets and fine dining.

That's according to a report from Rabobank, a Dutch multinational banking and financial services company. The growth of women's purchasing power, the advent of discounters and the global recession have contributed to the trend of hybrid consumption, Rabobank said.

"Given the driving forces of hybrid consumption, i.e. women's increasing role in household spending and the growing importance of Millennials (generations Y and Z), we believe that hybrid consumption is a long lasting phenomenon," noted Marc Kennis, senior analyst of Rabobank Food & Agribusiness Research and Advisory, in a statement. "Therefore food processors, food retailers and food service companies alike will need to adapt or risk fading away."

Rabobank predicts the food retail sector will become increasingly polarized with "premium" and "value" products at different ends of the spectrum, making it difficult for the middle market to keep share.

But food companies shouldn't fret. Rabobank has made a number of recommendations to take advantage of this consumer trend.

Among them:

·        Enter the high-end segment of a specific product category by, for instance, incorporating more natural ingredients, sustainable business practices and corporate social responsibility;

·        Offer inexpensive products within the premium segment and high-end products with the value segment;

·        Sell bargain products as a means to entice customers into purchasing higher-end goods