A new Dunnhumby report reveals the rising importance of health-focused shoppers in the U.S. grocery market.
The key finding of the “Better for You (Customer), You (Brand), and You (Retailer)” report is that this group of consumers represents a $285 billion annual opportunity, comprising 33 percent of the population and driving significant market trends.
Top performers in health-focused retail
Natural Grocers, Amazon Fresh and The Fresh Market emerged in the report as the leading retailers for health-focused shoppers, with 60 percent of their customers focused on health, compared to just 32 percent for the average U.S. retailer.
The report also found that 64 percent of U.S customers rank physical health as the most important need for them, ahead of financial (58 percent) and mental well-being (55 percent). More than half of customers expect a high level of support from retailers and brands with products, services and information for these three top needs.
Other findings from the study include:
- Health-focused customers are worth $285 billion to the grocery industry every year, about 20 percent of the $1.7 trillion industry, and representing 33 percent of the population. Retailers who over-index to this segment experience a long-term grocery sales growth (five-year compound annual growth) average of 7 percent.
- This segment tends to be younger (18-44), have more children, higher incomes ($100,000-plus) and monthly grocery budgets. They also exhibit more omnichannel and loyalty behaviors than their less health-focused counterparts.
- They care most about quality (63 percent versus 47 percent), digital (45 percent versus 30 percent) and values (55 percent versus 31 percent) and less about price (64 percent versus 71 percent) than their less health-focused counterparts.
- The future Gen Z customer is reshaping health behaviors. Sixty-one percent of them care most about mental health, 15 points higher than those between 45-54 and double that of those 75 years and older. Similarly, Gen Z and Millennials exhibit and invest more in values than their older counterparts.
“With health and wellness predicted to be the most critical trend for decades, retailers and brands have unprecedented opportunities to meet emerging customer needs.” said Matt O’Grady, president of the Americas for dunnhumby.
“This groundbreaking report provides a blueprint for meeting customers’ health needs now and into the future. As the grocery landscape continues to evolve, understanding and adapting to these health-centric consumer trends will be crucial for retailers and brands aiming to remain competitive in an increasingly wellness-oriented market.”
Brands and retailers can improve their standing with health-focused shoppers by getting a better understanding of the nine dimensions of health that reflect a more holistic understanding of consumer priorities, ranging from physical and mental health to environmental and financial wellness.
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Methodology
For the report, dunnhumby included the largest 73 U.S. retailers in the industry that sell everyday food and non-food household items. To identify the dimensions of health that matter most to customers, the behaviors that define better-for-you shoppers, the elements (or needs) of the customer value proposition that matter most to them and the best positioned retailers with these same shoppers, the company relied on two key resources: dunnhumby’s Consumer Trends Tracker (CTT) and dunnhumby’s Grocery Retailer Preference Index (RPI).
The RPI is a statistical model and contains more than 70,000 consumer survey responses conducted annually since 2017. The CTT – a long-term study that tracks the evolution of customer behavior over time on key trends – has 14,000 consumer survey responses over the seven waves of the report, which first published in April 2022. The company also conducted extensive desk research, reviewing more than 100 articles and white papers for the report.
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