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ALL ABOUTGROCERYSHOPPERSA QuadInfographicReport

TABLE OF CONTENTSOverview.3Industry Snapshot. 4-5Spending. 6-7Coupon Habits. 8-9In-Store Signage Trends. 10-11Technology. 12-13Multicultural Shoppers. 14-16Future of Grocery Shopping. 17-18Conclusion.192

OVERVIEWCOMPETITION AND CONVENIENCE FORGROCERY STORE SHOPPING“First we eat, then we do everything else.” Food writer M.F.K.Fisher’s words will always be true, but how Americans shop forfood has changed. And you don’t need to be an industry expert toknow delivery and mobile are reshaping retail grocery completely.E-commerce hasn’t hit food stores quite as hard as other brickand-mortar retailers. But nearly all grocers have pick-up optionsand are looking for best ways to deliver on-demand fresh food tohomes. Many new competitors specialize in this growing service.Mobile has transformed the in-store experience with things like,1:1 offers, loyalty programs, self-checkout and personalizeddigital signage. Software that tracks consumers helps managersoptimize store layout, and today’s consumers have higherexpectations for what’s on the shelves.Through it all, though, traditional grocery shopping is healthyacross demographics. This report digs into segmentation,trends and what’s next. Then it ends with a way to tie everythingtogether for success.Because while Ms. Fisher’s sentiment won’t change, today’sshoppers demand convenience — so they have more time to “doeverything else.”3

IndustrySnapshotEven with revenue in thehundreds of billions ofdollars, grocers are upagainst new challenges.Digital deals, organicproducts and socialresponsibility change theways stores operate to makea profit. The sector remainsnear the top of all retail,though, and those brandswho evolve will thrive.4

GROCERS — SNAPSHOTGroceryis the NDLARGESTRetail SectorGLOBALMARKET2 2TRILLIONSource: U.S. Census Bureau,January to December 2018Source: First ResearchU.S. GROCERYMARKET REVENUEUS Retail Sales 5.9 608 BILLIONTRILLIONSource: U.S. Census Bureau,January to December 2018Source: First Research55TOP 5 CHALLENGESFOR GROCERY INDUSTRYMillion Organic Trend Socially Conscious Millennial Voice Search Surge Busy Parents Digital ShoppersBought OrganicFood inSpring 2017Source: Orbital Shift, March 2018Source: Orbital Shift,March 20182019 Estimated Grocery Sales Revenue By Products35%18.1%12.8%9.4%Other FoodsBeveragesDairy ProductsOther Non-Food Items9.1%6.4%5.5%3.7%Fresh and Frozen MeatFrozen FoodsDrugs and Health ProductsFruit and VegetablesSource: IBIS 2019MAJOR MARKET SEGMENTATIONEarnings MORE THANEarnings EQUAL TOEarnings LESS THAN 70,000–19.1% 30,000 to 70,000–36.3% 30,000–44.6%Source: IBISWORLD.COM5

SpendingHouseholds spent moreon food last year than everbefore. And, that numberwill keep going up for bothgroceries and dining out,across all age demographics.Retailers need to think aboutprice, convenience and the instore shopping experience tohelp consumers decide whereto spend their money.6

GROCERY SHOPPER SPENDINGspend an average of 109per week on groceriesSource: Super Market News 2018average2.2 TRIPSto the grocery store eachweek per householdSource: Super Market News 2018Estimated OnlineFood and Beverageannually will happenby 2022 or 2024 100BILLIONSource: Nielsen 20183.2%5TOP Decision Factors by Chief Shopperclose to homepleasant atmospherealways shop therefood away from homewent up in 2019Source: Bureau of Labor Statistics 2019Average Americans Spendbudget on 6% ofgroceries5%of budget ondining outSource: U.S. Department of Agriculture, USA Today 201718%lowest everyday pricesfriendly employees14%8%6%6%Source: Quad 2018 Research Study Chief Shopper n 1,654Millennials n 558 Gen-X n 448 Boomers n 507 Seniors n 140Food at homespendingwent up.6%in 2019Source: Bureau of Labor Statistics 2019AVERAGE4,363 ANNUAL FOOD ATHOME SPENDINGSource: Bureau of Labor Statistics 20177

CouponHabitsIt’s not just shopperswho benefit fromcoupons — marketersget valuable data whenusers redeem offers. Andconsumers don’t stick toone channel to find thebest deals. Whether apps,retail inserts, email ordirect mail, coupons convertnew customers and giveloyal shoppers reasons tobuy more.8

GROCER COUPONS56%DIRECT MAILIN-STORE DIS36PLAY%31%49%emailAd InsertMOBILEDEVICE2725%%ProductPackagingSource: Quad/Graphics Customer Focus 2018 ResearchStudy Chief Shopper n 1,654 Millennials n 558 Gen-Xn 448 Boomers n 507 Seniors n 14051%seek coupons from a variety of souces to save both PRINT & DIGITAL46%AVOID retail price — wait for sales notice or use couponsSWITCH BRANDS of products used regularly with a COUPONuse grocery COUPONS REGULARLY or weekly37%43%Source: Quad/Graphics Customer Focus 2018 Research Study *Chief Grocery Shoppers are those who purchase 60% or more of their households’ groceries 9

SaleIn-StoreSignageTrendsBrick-and-mortar grocerystores are creating morewelcoming experiences, andspotlighting what customerswant. Digital can enhanceaisles with augmented realityand dynamic shelf labels.With digital convenienceand on-premise savings, thein-store experience is morepersonal and valuable.10

IN-STORE SIGNAGE TRENDSMobile Scan-&-GoCheckoutExperientialenvironments thatare welcoming andlook high-endIn-store advertisingdrives more salesof the timeIn-Store displays driveawareness, adoption,shopping bagsand instructions70%Source: visualogistix, March 2016Source: Business InsiderJanuary 2018Source: Chain Store Age, May 2018Customer-facingtechnology likedigital signage isa priority for15inNorth Americanretailers in 2018Global digital signagesales worldwide isforecasted to be worth 33 billion in2023Source: eMarketerSource: eMarketerOne additional signon-premise increasessales revenue by4.75%on averageSource: visualogistix, March 2016E-Ink Dynamic ElectronicShelf Labels Allows grocers toupdate pricing in realtime over the internet By 2024 the ESLmarket is expectedto grow more than 1.25 billionSource: MarketWatch, December 20182/3More thanof customers say thatsignage indicates thequality of a businessand their productAugmented Realityon signage helps linkconsumers onlineand provide productinformation–Nutritional facts– About 28,000 productsnow use SmartLabelSource: SmartLabel, June 2018Source: visualogistix, March 201615indigital signage advertisingspurs customers to make anunplanned purchaseSource: visualogistix, March 201611

TechnologyMobile has completelychanged the in-storeexperience — checkout,packaging, displays andsignage have evolved totake advantage of personaldevices. Grocers can use datafrom apps and other digitalbehavior to personalize andspeed up shopping.12

GROCERY SHOPPERS & TECHNOLOGY1/351Source: eMarketerSource: FMI U.S. GroceryShopper Trends, 20181/3% ofmillennialsof U.S.retailersconsiderdigital devices e.g.signage and magicmirrors, one of the top10 technologies for 2020either havedigitalsignage/kiosks in place or are inthe upgrade process; andanother third have plansto start upgrading in12–24 months.have useda mobile app to engagewith a store in the past12 months46%ofshoppersare likelyto scan a QR code orlabel for informationSource: FMI U.S. GroceryShopper Trends, 2018Source: eMarketerIn-Store Mobile Offers Influence Shoppers to Usage of appsprovided bythe grocerystore rose from15% in 2017 to22% in 201831%consider a producttry a productpurchase a productbuy more of a product21%19%12%Source: Quad/Graphics Customer Focus 2018 Research StudyFive Tech Trends Artificial Intelligence Rapid Checkout Voice Ordering Mobile App Enhancements BlockchainSource: FMI U.S. Grocery ShopperTrends, 2018Source: illshape-grocery-in-2018/514576/Online & Offline Consumer EMINDERSTHEPRODUCT PERSONALIZEDEXPERIENCEMOREPURCHASES rce: ate-ofOmnichannel-Commerce.pdf13

MulticulturalShoppersWhile all American ethnicgroups will grow in thecoming years, the Hispanicpopulation will increasethe most. Companiesshould look to these trendsto plan their inventory andmarketing as buying powershifts a bit more to AfricanAmericans, Asian-Americansand Hispanics.14

MULTICULTURAL SHOPPERSHISPANICBUYING POWER7 1.TRILLIONSource: www.statista.com, 2017AFRICAN-AMERICANBUYING POWER 1.2TRILLIONSource: Nielsen, February 2018Annual Tripsper icNon-Hispanic WhiteASIAN-AMERICANBUYING POWER 968BILLIONSource: NBC News, May 2018Combined, African-Americans,Asian-Americansand Hispanicsspent an estimatedon fresh products billion40 Source: opper-grocery-needs/535501/, 2017Source: Nielsen: A Fresh Look Into Multicultural Consumers, 2017Population Growth by Ethnicity 42%TotalSource: Nielson 1%WhiteNon-Hispanic 56% 142%BlackAsian 167%Hispanic15

MULTICULTURAL SHOPPERS cont.On average, Asian-Americans Purchase69%72%more freshseafod than thetotal populaion29%more freshvegetables, 23% morefrequently than therest of the populationmore freshfruits, 9% morefrequently than thetotal populationSource: Nielsen: Asian-American Total Consumer Report, 2016Where TheyShop–HispanicsWho They Bring to Store–Hispanics79% with someone50% spouse/partner34% children25% another adult21% shop alone91% Grocery storeSource: Statista 201822% Natural/organic store80% Mass merchant48% Club store44% Dollar store30% Hispanic/ethnic storeSource: Statista 2018African-AmericanShopper Purchasesat a Higher Rate Meat (pork and poultry cuts) Seafood Greens Cabbage Green BeansSource: Statista 2018African-American Brand Loyalty62buy based on QUALITY, not price77BRAND they like, they stick to itgladly SWITCH brands to use coupon53Source: 6

Future ofGroceryShoppingTechnology is not the onlything changing grocery —new generations preferand expect differentways to search, prepareand pay for food. Brandswill need to change theproducts themselves inways the industry has neverexperienced before.17

FUTURE OF GROCERY SHOPPING62%of shoppersagree they want alternativesto traditional, in-storegrocery shoppingBUY ONLINE,PICK UP IN STOREOver the next 5 years, 66% ofshoppers will use BOPUS moreGrocery DeliveryServices21% of shoppers buy 1–5% oftheir groceries onlineVOICE ORDERINGPurchases on Amazon EchoMEAL KITS27% completelyagree they wantgrocery stores todevelop meal kitsfor purchase in store38household supplies15packaged foods, snacksready to eat mealsbeverages88DRONE DELIVERYCustomers would want to opt-in for drone deliveryDASHBUTTONS56% would behighly likelyto buy freshgroceries fordelivery to home56hot, ready-to-eat food/mealssnacksgrocery essentialscold, ready-to-eat foods/mealscold, ready-to-eat foods/mealscold, ready-to-eat foods/meals4645413936SCAN & GO44% consumers are completely likely touse Scan & Go in the futureAll Sources: Field Agent’s May 2017 Survey18

CONCLUSIONMARKETING TO THE NEWGROCERY SHOPPERThe way stores sell groceries is changing to a degree we haven’texperienced since refrigeration came on the scene. And whilephysical and digital retail spaces evolve, marketing channels areahead of the game. With all the available channels and tacticsand the various vendor and agency partners that go along withthem, things can be very complex for grocery marketers.Quad’s integrated offering can help tie any or all of the followingservices together. We’ll reduce complexity, and increase processefficiencies and marketing spend effectiveness. But mostimportantly, we’ll help your brand stand out and make your lifeeasier. Media PlanningCampaign PlanningWorkflow SolutionsCreative ServicesContent Production ServicesRetail Inserts, Catalogs & Direct MailIn-Store SignagePackagingTo find out EXACTLY how we’re helping grocery retailers witheverything from strategy through fulfillment, contact Quad today.19

See how we can help.866.824.2869info@quad.comQuad.com 2019 Quad/Graphics, Inc. All rights reserved. 2.19 Job Number File Name

Services 21% of shoppers buy 1-5% of their groceries online All Sources: Field Agent's May 2017 Survey household supplies 38 packaged foods, snacks 15 ready to eat meals 8 beverages 8 hot, ready-to-eat food/meals 56 snacks 46 grocery essentials 45 cold, ready-to-eat foods/meals cold, ready-to-eat foods/meals cold, ready-to-eat foods/meals .