Rising Grocery Prices Could Boost Store Brands

A survey by Vericast finds as rising grocery prices continue to put the squeeze on shoppers’ wallets, it is also increasing their stress levels and turning many of them to buying more store brands.

The survey found 50% of all consumers and 64% of millennials indicated making spending decisions as prices rise has taken a toll on their mental health. This comes from some tough decisions consumers must make in either cost cutting or choices on what is most important to them.

One of the decisions many have made is to buy store brand products. Vericast found that 72% of respondents report they are buying more store or private-label brand products to save money.

When it comes to grocer loyalty amidst the inflated cost of groceries, Vericast said 64% of respondents have not changed the grocery store they frequently shop at within the last six months, but 27% have changed grocery stores in the last six months to save money.

Dave Cesaro, Vericast’s retail and consumer behavior expert, said the finding that 27% have changed stores was surprising given how many continue to stay with the stores they have always visited.

“Chances are the new store they’ve chosen is not as close or convenient as the original, which means these consumers are shopping around, even for necessities, because saving money is that important to them.”

The study also reported that 88% of shoppers were turning to coupons or discounts that are motivating them to buy something from a brand or store they have not shopped at before. 

For the study, Vericast surveyed 1,000 U.S. adults to assess consumer behavior changes during inflationary times.

Food Innovation: Pleasure, Health and Ethics are Winners

French consultancy ProtéinesXTC has analyzed innovative products launched in the world in 2021. According to the study, the first axis of food innovation remains ‘Pleasure’, innovations with this claim represent 47.8% of the global innovations identified by the study in 2021, i.e. nearly one in two innovations.

The ‘Health’ attribute comes in second with over 30% of food innovations. Third important axis is ‘Ethics’, this attribute has been increasing continuously for 5 years and now represents 7.9% of innovations worldwide, with the highest share in Europe (one in ten).

 

State of Grocery Retail 2022

McKinsey and EuroCommerce have published a report on The State of Grocery Retail 2022.’ It’s based on interviews with 60 European grocery CEOs and a survey of more than 12,000 consumers across nine European countries.

It reveals that, in the short term, the impact of the invasion of Ukraine as well as inflation and energy costs are top of mind for CEOs, putting even stronger pressure on prices and operational efficiency, along with the wellbeing of employees.

Future trading will feature increased margin pressure on grocery retailers, the report warns, with the need to cater for broader consumer demands, growing price pressure and increasing multi-channel complexity.

Changes in consumer demand with regard to product attributes and purchase channel and more insights and perspectives that will likely shape European grocery retail in 2022 and beyond will be discussed by McKinsey at PLMA’s pre-trade show seminars on Monday 30 May.

 

Majority of Consumers Care About Sustainability

According to findings from the Blue Yonder 2022 Consumer Sustainability Survey, nearly nine of 10 respondents are willing to delay e-commerce deliveries for the sake of improving sustainability if given an incentive to do so. Of those respondents, 29% are willing to delay deliveries up to five days and 28% are willing to delay a week or more.

The survey found social media has a major influence, with over half (52%) of respondents’ reporting to pursue sustainable shopping frequency. This includes 45% who said they were slightly-to-moderately influenced, and 7% said they were moderately-to-significantly influenced.

For those consumers who were persuaded by social media, Blue Yonder said the strongest influence came from Facebook and Instagram, with 31% and 28%, respectively. Facebook is the most popular platform for ages 45 and older, and Instagram for ages 18-44. TikTok (16%) and Snapchat (5%) were not as large of an influence with respondents.

The Consumer Sustainability Study also reported 81% recycle boxes/bags from in-store and online shopping at least half the time, and more than half (53%) recycle packaging 75-100% of the time. Almost two-thirds (64%) of respondents are willing to spend more on sustainable packaging, while 44% willing to spend up to 5% more. Four in 10 of those surveyed said there should be a minimum amount a consumer must spend to qualify for expedited shipping or shipping in general.

Blue Yonder collected responses in March 2022 from over 1,000 U.S.-based consumers, 18-years and older, via a third-party provider for this survey.

Consumers Making Major Changes as Prices Rise

According to a survey by Advantage Sales, 46% of shoppers said that they are spending more money on groceries now, and almost a fifth say they are spending “much more.” This has led to consumers altering their shopping habits in a few different ways.

So how are shoppers changing their behaviors? Perhaps the largest change in shopper behavior is in what products they buy and why. Forty percent are opting for more store brands, and the same amount are purchasing the same kinds of products they normally do but selecting cheaper brands.

Consumers buying more store brands is not the only method shoppers are using to save money Advantage Sales found. For instance, the study also found many shoppers are bringing home fewer items. Almost 4 in 10 are putting fewer groceries in their carts and 10% are purchasing “much fewer” products.

Impulse buying has also been impacted. One-third of shoppers have tried to eliminate all impulse buying. Other are changing where they shop. Almost half of those surveyed are shopping more at mass merchandisers or superstores or from their websites, and still another one-third are turning to traditional grocery stores who are known for having lower prices.

Consumers are not the only ones struggling with choices as prices increase. Advantage Sales pointed out retailers and manufacturers were trying not to pass along price increases to their customers, but now financial strains are compelling them to act.

“For the past year, retailers held off passing the entirety of manufacturer price increases on to their shoppers,” Kimberly Senter, Advantage Sales’ EVP of analytics, insights and intelligence said. “But they weren’t expecting manufacturers to take two, three or more increases in the last two years. Now, our research shows 9 out of 10 manufacturers plan to take price increases their year, and half of retailers say they will be passing along at least 90% of those price hikes to the shelf,” Senter said.

Shoppers: Out-of-Stocks Still a Major Issue

Because of continued supply chain disruption and retail labor shortages, many U.S. shoppers say out-of-stocks are worse now than during the height of the pandemic.

A study of more than 1,000 U.S. shoppers by Retail Insight found 7 in 10 consumers felt product out-of-stocks are now worse in-store compared to when consumers panic-bought at the start of the pandemic in 2020. Another 61% reported online stock availability was also lower now than during the same period of panic buying.

The Retail Insight survey also found 54% of shoppers said out-of-stocks seemed to be more of a bricks-and-mortar issue. When they could not find items in-store, shoppers were able to find those missing products online in some cases. However, 6 in 10 consumers said when they were in-store there was often a replacement item that met their needs if their usual products or brand was not available on the shelf.

Online shopping also suffered from the same out-of-stock problems as brick-and-mortar stores according to shoppers. Forty-six percent of shoppers reported more products were missing or not available in their online grocery orders, and the same number said they had experienced more substitutions in their weekly online shopping.

While 48% blamed the pandemic in general as the biggest cause of out-of-stocks, another 37% felt there were not enough staff available to stack shelves in-store, while 36% blamed a shortage of warehouse operatives as a reason for the empty shelves. A further 37% blamed the rising cost of food production and another 44% of consumers said retailers did not have the technological infrastructure needed to cope with heavier demand to keep shelves stocked with products.

Consumers want more choice in meat substitutes

A study by GfK in Germany shows that many people who buy meat substitutes want a larger selection, better taste and fewer artificial additives. While in the first generation of meat substitutes, the list of ingredients and additives seemed to be endless, over the past few years, manufacturers have increasingly focused on the topic of "clean labeling" and are endeavoring to reduce the use of E numbers. But without additives, meat substitute products cannot be made to resemble the original meat and sausage products in terms of consistency and structure. Research continues to replace chemical additives with ‘natural’ alternatives like citrus for juiciness or protein-rich lupins.

Will Europeans Ever Shop the Same?

For most Europeans, the shopping experience has been altered dramatically over the past two years, according to a new PLMA International survey that collected responses to more than 50 questions from more than 6,000 participants across eight countries.

The survey found significant shifts in how often and where consumers shopped, what kinds of products they bought; and the ingredients, qualities, and attributes they most valued in the goods they purchased; as well as in their attitudes towards brands, particularly private label. Importantly, respondents also indicated the ways in which they believe their shopping habits and purchase preferences have been permanently changed as a result of the pandemic experience.

Findings from the survey, “Will Europeans Ever Shop the Same? Assessing consumers’ post-pandemic behavior,” will be revealed by PLMA at its annual “World of Private Label” international trade show, 31May – 1 June, at the RAI Exhibition Centre, in Amsterdam.

Organic wine on rise among younger consumers

A survey by Ipsos among 3,000 consumers across France, the UK and Germany has revealed that organic wine is increasingly resonating with consumers, especially younger ones. Around 46% of under 35s have already consumed organic wine, compared to just 38% of over 55s. The average consumer profile is that of a young, urban, high-income graduate.

Nearly a third (29 percent) of those surveyed said organic wines were part of their regular purchases, against 17 percent in 2015. Of the three countries observed, it is in France that the most wine is consumed and that the attraction for organic has grown the most, from 17 to 36 percent in six years.

Around 61% of respondents believe that organic wine is more environmentally friendly: representing the biggest driver towards organic product. But societal and ethical concerns are there too. For example, 35% of consumers believe that organic promotes fairer trade.

Other factors driving consumers towards organic wine is the perception that it is healthier and of higher quality.

IRI Finds Inflation is Changing Shopping Behavior

In February, 75% of consumers said they had made at least one change to their grocery-shopping behaviors to keep spending in check in the face of rising inflation, according to IRI's latest grocery performance report. This is an increase of 11% from January, when 64% of shoppers had the same response. This is also an increase from November 2021, where 61% had changed their habits due to inflation.

Most U.S. consumers have been noticing higher grocery store prices for months. In November, some 90% of consumers told market researcher IRI they were seeing prices slowly rising in various grocery departments. But now, more say they are changing their buying behaviors at the supermarket and beyond in response.

In addition, consumers in February reported that they continued to reduce their restaurant visits to save money. "Sixty-three percent of shoppers are trying to save money by purchasing less restaurant food and preparing more food at home," IRI reported. Survey respondents estimated that about 82% of their meals in February were prepared and eaten at home.

Forty-five percent of consumers told IRI in February they had made stock-up purchases including 16% who said they had done so out of concern that prices could be higher in the near future. Another 20% expressed concern about future availability of products in general.