As consumers’ tastes and preferences are shifting, larger and older companies are trying to adapt to provide what consumers want. Nielsen’s 2015 Global Health and Wellness Survey, which included more than 30,000 participants, provided statistics such as one that stated that 88 percent of consumers are willing to pay more for healthier food. Companies like Target and McDonald’s are trying to acclimate as the country is seeing a surge of fast-casual options. These options include outlets like Chipotle and Shake Shack, which provide the low price and convenience of fast food but with better ingredients and healthier options.
In an attempt to modernize its grocery segment, Target has just hired an executive who has long worked in the food industry in an attempt to modernize its grocery segment. Anne Dament, who has worked at Safeway and ConAgra Foods, was hired to head Target’s overhaul. The goal is to add more organic and gluten-free choices, to offer products from local vendors and to focus on the wants of younger consumers. This change would mean reducing the shelf space of larger companies that specialize in pre-packaged and more processed foods. Changes in consumer tastes have sparked Target to update its grocery business, which accounts for just over 20 percent of the company’s annual revenue.
Consumers are no longer reaching for processed foods such as cereal and soda as frequently. This change in consumer tastes and preferences can be seen with companies such as McDonald’s, which is currently the world’s largest restaurant chain. According to data from Bloomberg Businessweek, sales in November 2014 fell 4.6 percent for McDonald’s franchise stores that were open for at least 13 months. This statistic is the worst that the company has seen in more than 10 years.
There is also a rise in fast-casual restaurants such as Chipotle and Shake Shack. Business Insider states that in 2013, sales for Chipotle increased over 9 percent while McDonald’s saw a 1.3 percent decline. The article states five reasons why Chipotle is beating rivals like McDonald’s, which include fast lines, customer service, better atmosphere, healthier image and its trendy appeal. An article in The New York Times also states that changes in consumers’ tastes are the reason for the decline in McDonald’s revenue.
So, it remains to be seen if companies like Target and McDonald’s can successfully rebrand themselves to appeal to the modern consumer. Target knows it must do a better job of appealing to the young and more urban consumer, while McDonald’s has tried marketing strategies such as a Pay with Lovin’ campaign to boost sales. Meanwhile, fast-casual chains are taking over market share from typical fast-food rivals like McDonald’s. Only time will tell how strong the shift in consumer tastes and preferences really is and how greatly it will affect other long-standing corporations.