What tradeoffs are consumers willing to make to stretch their food dollars?
A new survey finds 76 percent of U.S. consumers saying their family has changed how they buy food with prices on the rise.
The survey from NCSolutions, taken in mid-June, found that 43 percent are buying only food essentials, given their inflation as well as recession concerns. To offset higher prices, shoppers are seeking out less expensive brands (45 percent) and loading up the pantry (27 percent) or freezer (26 percent).
Sixty percent plan to seek less expensive alternatives when their favorite brands reach a price beyond their budget, 46 percent plan to go without their favorite brands and 43 percent will look for sales to offset the cost.
Other surveys have likewise explored whether grocery shopping behavior will revert to patterns generally seen in more challenging economic times or whether unique patterns will emerge amid the highest inflation rates in 40 years. Food-at-home prices spiked 13.1 percent in July on a year-over-year basis.
PYMNTS’ “Consumer Inflation Sentiment” study, drawing on a July survey, found that, due to increased grocery prices, consumers are switching to cheaper merchants (45 percent) and choosing products of lesser quality (37 percent).
A Morning Consult survey taken in June concluded that inflation is causing consumers to eat out at restaurants less often (84 percent), purchasing less meat (72 percent), purchasing less alcohol (68 percent) and avoiding organic produce (52 percent).
On Albertsons’ quarterly call, Vivek Sankaran, CEO, said he sees two trends around inflation.
One is a consumer that is “clearly trading down” in some categories, citing rice, beans and oils. He said, “The good news is they’re trading down into a lot of our own brands on that front.”
Second, some consumers “who have cash but are very value conscious” are trading down on “daily needs” but are willing to pay for certain items. He cited strength in store-made sandwiches, ready-made meals, organic meats and premium beer. Mr. Sankaran said, “We’re seeing this behavior where people are value-conscious but are willing to spend on the things that they care about.”
- Nearly Half Of Americans Feel They Can’t Afford Their Former Lifestyle; Three-Fourths Are Shifting Grocery Purchasing Behaviors, Finds Ncsolutions – NCSolutions/PRNewswire
- Three in Five Consumers Cut Back on Nonessential Grocery Spending – PYMNTS
- Consumers Are Cutting Back on Dining Out, Meat Consumption as Inflation Intensifies – Morning Consult
- Albertsons Companies, Inc.’s Q1 2022 Earnings Call Transcript – Seeking Alpha
- Walmart Inc. (WMT) Q2 2023 Earnings Call Transcript – The Motley Fool
- Target (TGT) Q2 2022 Earnings Call Transcript – The Motley Fool
- Grocery Outlet Q2 2022 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: Do you suspect grocery shopping behavior will follow patterns seen in recent downturns or do escalating food prices and other factors throw that out of alignment? How may the trading down trends differ from previous downturns?