DISCUSSION

Is inflation giving grocers a bad rap?

February 21, 2023Written by Tom Ryan

Photo: RetailWire

Shoppers believe grocers are making 14 times more profit than they actually are and also believe food-at-home inflation is about two times higher than reality, according to a new dunnhumby analysis. The survey taken in November found U.S. shoppers believe:

Grocers are earning a 35.2 percent net profit margin, 14 times higher than the average of 2.5 percent.
Consumers believe food-at-home inflation stands at 24.3 percent, more than twice the 10.4 percent year-over-year inflation figure released Tuesday by the U.S. Bureau of Labor Statistics.

“Retailers are in a precarious position with their brand perception, since customers are vastly overestimating grocers’ store profit margins and inflation rates, while they themselves are battling food prices,” dunnhumby president of the Americas Matt O’Grady said in a statement. “Retailers need to show they are empathetic to customers through their prices, their rewards/loyalty offers, and with messaging to best support shoppers during these challenging financial times.” The survey findings come as grocers are reportedly seeking price reductions from suppliers or demanding proof they need to keep prices high as inflation cools. In the UK, Tesco chairman John Allan in January told the BBC that it was "entirely possible” that some food firms were using inflation as an excuse to hike prices. Last week, the U.K. upscale grocer Waitrose committed to lowering prices by £100 million across a range of essential products. James Bailey, Waitrose’s executive director, said in a statement, “We understand that getting value for money has never been more important for everyone.” In Canada, members of Parliament have summoned the heads of the country’s largest grocers to answer for skyrocketing food prices and surging corporate profits. Loblaw recently began defending itself on social media by pointing out its low margins and blaming suppliers. One response on Twitter read, “We may be the face of food inflation but we are certainly not the cause. Food prices are higher in our stores simply because the manufacturers who make the products are charging more for them.”

Discussion Thread0