EXCLUSIVE: How Consumers Are Trading Around – and How Grocers Can Respond
Inflation may be muted, and the lines between retail and foodservice and between retail channels may be blurred, but a clearer picture of consumer shopping habits is emerging as the mid-point of 2024 approaches. Progressive Grocer recently spoke with Sally Lyons Wyatt, global EVP and chief advisor for consumer goods and foodservice insights at Chicago-based Circana, about some of those habits. Wyatt, who recently penned a blog post on the ongoing impact of inflation, shared some ways that consumers are navigating their shopping journeys and how food retailers can creatively adapt to market shifts.
Progressive Grocer: Even with reports that food prices are coming down, how are consumers still displaying a certain wariness as they shop for groceries?
Sally Lyons Wyatt: Shifting is still a thing, and there is more of it going on. Some people have shifted from out-of-home to in-home eating – that’s one shift. Also, there has been a shift from grocery to value channels.
PG: What are you seeing in that cross-channel behavior?
SLW: We are seeing some differences from 2023 to 2024. In 2023, it was shifts to mass, dollar and convenience. Now, we are seeing club, dollar and e-comm.
I think the e-comm piece presents a couple of different parts of convenience. It’s more convenient than walking or getting into your car to go to the store. It’s also easier to shop prices with e-comm, as you try to manage your wallet. While one could argue that e-commerce is more expensive, many people say that it’s easier than going to a restaurant and having to pay a tip.
PG: What about reactionary behaviors in the products that shoppers are buying?
SLW: There is some shifting from mainstream to premium and another shifting from mainstream to private brands. We’ve seen a bifurcation that premium is going up, but so are private brands. We see some bifurcation in size, too, with some consumers going to multipacks for a better price per pound and some trading down to smaller sizes, and that’s where the dollar channel comes in.
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For a grocer, I think it’s about understanding these shifts and helping consumers on their journey to make it easy.
PG: It’s certainly a balancing act.
SLW: It’s getting the combination of the right sizes, the right promotions, the right loyalty programs and the right communications in getting to consumers.
PG: As grocery prices become more stable, as we saw with the latest CPI data, are grocers in a good, or at least better, position?
SLW: We have seen a softening of inflation in retail food and beverage, and are also seeing foodservice accelerating because of labor costs. There is a direct correlation of inflation coming down and volume (at retail) starting to accelerate. For grocers, it’s getting part of that volume growth – it’s out there.
PG: With shoppers moving across channels, how can grocers capture that volume growth?
SLW: One thing is around occasion management. It’s something we are talking a lot about lately. For snacking occasions, for example, it could be a permanent area of the store that they rotate out based on the time of year or the day. Grocery stores can be a hub for occasions, and not just categories, because today’s consumers are not buying for a category.
In the snack hub, you could have created a Taylor Swift listening party area. There will be additional viral moments like that – there’s always going to be something, and the whole idea is to make it easier for the shopper. It can be hard to operationalize, but if they can do that, it will spark excitement among consumers. And once you get them in, then they can shop categories.
PG: What about everyday meal occasions?
SLW: We have seen retail foodservice do quite well, especially at the evening occasion. If you have to get started and pick one (daypart), I say the one to capture more growth with is dinner. You have to compete with delivery, but you can reach people on the way home from work or somewhere else.
