The Need for Food Retailers To Work With Suppliers & Improve Product Transparency

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Consumers today are demanding more information than ever before on the food they buy and eat. It’s not a new phenomenon, but it’s an important point for food companies and retailers to take note of, especially as they compete for customers’ dollars and loyalty. A new report, however, has shown nearly two-thirds of consumers don’t think food companies are transparent enough — they want more food production information than they are finding at the grocery store.

This perceived transparency has improved slightly over the years, from just 19% of consumers in 2012 saying they thought food companies shared enough information on products. In 2014, that grew to 30% and today stands at 34%, according to the report titled “Evolving Trust in the Food Industry” from Sullivan Higdon & Sink FoodThink. Trust in grocery stores has also improved 14 percentage points from 2012. But clearly, there is still room for improvement.

Food Retailers Working With Suppliers to Increase Transparency

Food retailers are taking note of the growing demands from consumers for more product information. According to Brian Miller, vice president of services at Intesource, a provider of e-sourcing solutions for the grocery retail industry, food retailers are realizing the more food product information they can offer the consumer, the more they are likely to build brand loyalty and gain the trust of consumers.

“The more information you can provide for customers, the more trust in your brand you are creating, which is extremely important,” Miller said.

To achieve this, though, grocery store companies need to do some digging into their supply chains. Miller said retailers are increasingly requesting more information from potential suppliers before agreeing to work with them. Retailers want to ensure food suppliers are complying with global food safety standards, for instance, and can provide a certain level of visibility into the ingredients they are using. Requests for this sort of information used to be “occasional,” Miller said, but “now, they are all the time.” He added that nearly 100% of the food retail organizations Intesource works with are requesting this higher level of supplier information up front.

Another industry standard as companies work to achieve more transparency into the supply chain is conducting more regular audits of suppliers, Miller said. Companies should think to conduct their own audits of their suppliers every six to nine months, he said. Annual audits just don’t cut it anymore.

“What used to be the industry standard is now the minimum,” Miller said.

Behind the Scenes Due Diligence

Anton Xavier, CPO and co-founder of Label Insight, agrees the demand for this information from both consumers and food retailers has grown in recent years. Today, it has became an “absolute must have” for the food retail industry, and companies are realizing they need to achieve a level of transparency and product information to engage with shoppers going forward. Companies are also recognizing they still have some work to do to to hit the level of transparency consumers demand today.

“There is a rush to solve this challenge,” Xavier said.

Nevertheless, food retailers are working behind the scenes to gather this enhanced product information to respond to consumer demands. Label Insight, for example, works with both suppliers and food retailers to help the industry “migrate toward full product data transparency,” Xavier said. Using information from sources like a product label or images from a supplier's packing, Label Insight analyzes the data to determine the product's “attributes,” such as what ingredients it contains and what allergens are in it. The end goal, Xavier said, is to get this information in front of the consumer and help drive transparency into the decision making process at the grocery store.

Food retailers working with suppliers are motivated to obtain as much product information as possible in order to deliver that to the customer. The growth of omnichannel shopping is also changing the way consumers buy their groceries and will continue to push retailers to deliver product transparency, Xavier said, as consumers search online for only the food that meets their dietary needs. Having the correct product information will be key for food retailers to provide this filtered and more convenient shopping experience, he said.

Thank the Millennials for this ‘B2B2C’ Movement

Rick Chavie, CEO of EnterWorks, said the process of food companies collecting data from suppliers on food product to ultimately share with shoppers is creating a “B2B2C environment,” where the business-to-business relationship moves to serve the business-to-consumer relationship.

Millennials, too, are a key factor for the increasing demand for food product information. Chavie said this generation wants to know more about the food it eats — from the social and environmental factors to the nutritional data on a product. Millennials, for instance, want to know how the food was grown, gathered, where it came from and the labor used in the process of creating it. They also are mindful of allergies like lactose or gluten, he said. They want to shop for the foods that meet their specific requirements at grocery stores and eat prepared meals at restaurants that also fit their needs — it’s this growing demand of “personalization,” Chavie said.

Society overall is becoming more aware to food sensitivities and is increasingly following stricter diets, which is a main driver in the demand for food transparency. While some may chalk up the rise in popularity of veganism or gluten-free diets to a growing fad, it’s important for the food industry to take these signs as more than a current trend that will fade with time.

“This is not going to pass,” Chavie said.

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