Fifty years ago, when supermarkets were the "stores of the future," retailers and manufacturers pretty much knew where to find their customers. Food came from food stores; drugs from drugstores; and cooked meals were consumed at drive-in or sit-down restaurants.

But America is nearing the 21st century, and while supermarkets stock more than ten times the number of SKUs [stock-keeping units] they did in the 1950s, they are not the only kids on the block. Consumers can buy groceries at drug stores, drugs at grocery stores, and prepared foods just about anywhere they want.

Knowing where your shoppers plan to buy their food, their HBC [health and beauty care] products, and their drugs is as important as knowing who among your customer base buys them. Supermarkets have been holding onto market share, but with the emergence of mass merchandiser/ supercenter retailers such as Wal-Mart and Kmart offering new food formats, they must sit up and take notice.

Given the ever-widening range of channel options, consumers are quick to take advantage of retailers that provide them with convenience, good prices, and ample product selection. They shop more than one channel, they shop more than once a week, and they are looking for products and services that make their already-stressed lives a little bit easier. For young, affluent shoppers, that retailer may be on the World Wide Web; for seniors, it may be the corner store that offers free delivery.

As we enter the next century, America will be more demographically diverse than at any other time in its history. To help understand the rhythm of shopping patterns among the generational groups that will make up this diversity, we looked at four distinct product groups — coffee, vitamins, breakfast foods and snacks — across nine demographic lifestage definitions. Using ACNielsen Homescan Consumer Panel information, manufacturers and retailers can keep "in tune" with the wide and complex world of consumers and catch a glimpse of what the retail environment of the 21st century might look like.

Baby Boomers: A Demographic Transition

It is claimed that every 20 seconds, another Baby Boomer (born between 1946 and 1964) turns 50. It is not an overstatement to say that the aging of the Baby Boom generation will dramatically change America in the years to come. By 2015, the youngest Baby Boomer will turn 50; the oldest will be almost 70. Soon, the Baby Boom market will move from middle age to maturity. The number of people in this new super-category will be staggering: more than 107 million, or 34 percent of the country's population, will be age 50 or older in 2015.

What does this mean for manufacturers and retailers? Will Boomers take on the characteristics of the current senior population when they start to use their "golden age" passes, or will they keep to the Boomer credo — defiant, trend setting, and assertive — as they age? The continuing maturity of the Baby Boom will have both subtle and not-so-subtle effects on the way we do business.

For example, it seems unlikely that Boomers will follow current seniors when it comes to coffee consumption patterns. The soluble (instant) coffee category, with a household penetration of 25 percent, is underdeveloped in all lifestage segments except Empty Nesters and Older Singles. Members of the current mature market are more likely to purchase instant coffee than expected and the Boomer generation is more inclined to purchase ground or liquid coffee.

Flavored instant coffee, which has a slightly lower household penetration than the unflavored variety (18 percent) has a somewhat different user profile, appealing to Empty Nesters but not to Older Singles who may not have developed the palate or the habit for such products. But flavored soluble coffee also has a following among Established Families and Middle- Aged Childless Couples.

These coffees may have a certain cachet, since advertising for flavored soluble coffee plays on the idea of affordable sophistication and convenience, two attributes that would appeal to active middle-aged couples or time-strapped parents of teenagers. It's also possible that the teenagers themselves are trying flavored coffee as an entree to the category. At any rate, manufacturers should explore the purchase dynamics of light buyers of the coffee category to assess whether marketing efforts should focus on improving the frequency of purchase or purchase size.

Of the many accomplishments Boomers can call their own, none may be as significant as their contribution to the creation of a new baby boom — the children of Boomers. And even though Boomers are concerned with fitness and wellness, they are in many cases more likely to put their children's health ahead of their own. The vitamin categories provide an excellent illustration. The multi-vitamin category is overdeveloped for the older generation — Older Singles and Empty Nesters purchase more multi-vitamins than expected relative to their incidence in the population.

Conversely, the fast-moving, family-raising households with little free time and lots of need for an extra boost purchase fewer multi-vitamins than their share of the population would suggest. But they are making sure that their own children have enough vitamin power to keep them going. New Families (households with children under the age of six) purchase 350 times more than expected in the children's flavored chewable vitamins category, but 25 percent less than expected in the adult multiple vitamin category. The same pattern is true for households with children between the ages of six and 17. Marketers should focus efforts to increase the frequency of purchase of multi-vitamins among households with children. Perhaps multi-vitamins and children's flavored chewable vitamins are good candidates for cross-promotion. Other strategies might include targeted ad copy and in-store marketing activities.

Generation X: From Latchkey Kids to Savvy Shoppers

The young adults of Generation X (born between 1965 and 1976) have had a much different experience growing up than their parents did. The first generation of "latchkey kids," Xers grew up with mothers going back to work, television as a baby-sitter, and a shaky economic climate — fostering an early independence and the constant reminder that they might not reach the levels of affluence and prosperity of their parents. But the 20-and 30-somethings of Generation X have survived and are settling down, buying homes, and raising families.

This is the first generation to grow up with the Internet, cable television and video games. These young men and women are accustomed to getting information quickly, and they use their technical prowess to shop online as well as in line. Given the environment in which they grew up, Xers are as idealistic as Boomers, but far more skeptical of just about everything. And they are savvy shoppers — it was not unusual for them as children to make purchase decisions for food and other household products. Their working mothers, busy coping with the juggling act, often deputized Xers to pick up groceries and make their own meals. Analyzing ready-to-eat (RTE) cereal, a popular and no-prep breakfast meal solution, we find that the category is not as popular among Generation X as one might expect.

The RTE cereal category is underdeveloped for Young Singles and Childless Younger Couples, who purchase less than expected. The fact that this category is dominated by children's cereals indicates a possible reason. The only cereal category that shows a higher than expected volume index from Generation Xers is granola and natural cereals. While the household penetration for these healthful products is only 13 percent, the category is a bit overdeveloped among Young Singles (12 percent more likely than expected to purchase) and Childless Young Couples (19 percent more likely than expected). Empty Nesters gravitate more toward hot and healthful cereals rather than ready-to-eat cereals.

Although resting squarely in the hands of households with children, nearly all households purchase RTE cereal with a category penetration rate of 95 percent. New Families, Maturing Families, and Established Families, all households with kids, tend to be big contributors to the RTE cereal category.

The observed differences in cereal consumption among different generational groups suggest segmentation opportunities for manufacturers. Cereal makers can capitalize on these differences by offering and advertising their products to meet the demands of each consumer segment — such as healthy cereals for Generation Xers and Seniors.

Generation Y: Increasing in Size and Importance

The New Baby Boom, Generation Y (people born in 1977 and later), is the result of a good percentage of the 76 million or so Baby Boomers following their biological destiny. Generation Y currently comprises some 72 million people (currently 28 percent of total population) and it is still growing. Combined with the Baby Boom generation, these two groups make up almost 60% of the U. S. population.

Kids and teens have a great impact on the country's economy — they shop on their own, with their own money, and they influence their parents' shopping patterns. According to Texas A& M marketing Professor James McNeal, an expert on the children's market, children spend more than $7 billion of their own money per year on food and beverages. And while this is a significant amount of money, it's not surprising considering how much money kids have to spend. The average yearly income of children between the ages of 4 and 12 in 1997 was $14.90. Multiply that by the 36 million or so children in that age cohort, and one can see just how strong the kids' market is.

The teen market is also huge. The average yearly income of teenagers between the ages of 13 and 19 in 1998 was $78, according to Peter Zollo, of Teenage Research Unlimited. Teenagers spend their own money in a number of ways: the top favorites include fast food, soft drinks, candy, gum and snacks.

Taking a closer look at the snack category, it is not surprising that almost every household (90 percent) buys the most favorite of salty snacks — potato chips. Tortilla chips and pretzels round out the top three snack categories, with household penetration rates of 76 and 62 percent respectively. Maturing Families and Established Families are key consumer segments of this category. By contrast, the category is severely underrepresented among other lifestage groups, especially the three segments that comprise the "Single" households (Young Singles, Middle-Aged Singles, and Older Singles). Health bars and sticks, with a total penetration level of only six percent, appeal to the Young and Middle-Aged Singles groups as well as to couples with no children.

Potato chips turn up on shopping lists at every outlet. While 95 percent of shoppers buy them at grocery stores, 40 percent of shoppers buy chips in mass merchandisers, 16 percent pick up the snack at drug stores and 11 percent purchase them at warehouse clubs and convenience/ gas outlets. It's not surprising that teens and kids are frequent visitors to all these formats.

Each generational group is influenced by the values and deep-rooted ideals that shape their demographic "type class." Understanding the motivational drivers of each of these groups provides manufacturers and retailers with the necessary clues and insight into what these consumers buy and where they shop. Consumer information not only facilitates an educated targeted marketing strategy, but also provides the competitive edge necessary to ensure optimal product potential. As we move into the next century, more shoppers will expect a shopping environment constructed to meet their individual needs. Having a more focused knowledge of the shopping public is one sure way for manufacturers and retailers to demonstrate that they care about their clientele — an effort that will undoubtedly be rewarded.