After the boom, grocers must cater to the echo

A new study suggests grocery stores must find innovative ways to meet consumer demands as purchasing power shifts away from baby boomers toward a younger, pickier generation: the millennials, otherwise known as the echo generation.

A survey of 2,000 consumers in May in the U.S. found that food-at-home spending will increase by $50 billion annually for millennials (those born between around 1982 and 2001).

At the same time, spending among boomers in the United States is expected to decrease by $15 billion annually by 2020.

Millennials are less loyal to brands than their older counterparts, more price-sensitive, and cite convenience as their top priority when shopping for food, according to "Trouble in Aisle 5," a study conducted by Global investment bank, Jefferies, and business advisory firm Alix Partners.

"The milliennial generation is completely brand agnostic," says Scott Mushkin, consumer food and drug retail analyst for Jefferies, and the study's co-author.

Traditional grocers, already facing stiff competition from mass merchants, club stores and online retailers, need to find ways to meet the varying distribution and delivery preferences of the younger generation.

"These are people who are very comfortable going on Amazon.com or Diapers.com, and waiting a day or two to have products delivered to their doors," says Mushkin. "They're using smart phones to get product information, do price comparisons and download coupons."

Mushkin says grocers can best serve this new generation by boosting the offerings on the perimeter of stores, where they continue to have a competitive edge– focusing on diverse and specialty offerings in deli, produce and fresh foods.