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NOT ALL SHOPPERS ARE RACING TO THE BOTTOM

Inflation isn’t the only factor affecting how consumers shop. Here’s what’s changed, and what you should be doing now.

While inflation continues to affect consumer purchases, it’s wrong to always assume consumers are racing to the bottom, said Jonna Parker, principal, fresh foods, for IRI, the Chicago-based market research firm. Parker, one of three IRI executives speaking at a recent webinar put on by the International Dairy Deli Bakery Association, Madison, Wis., outlined changes in the way shoppers think about foods and how market strategies should
be evolving.

For example, consider these five statistics about the United States:

2.5 people make up the average house-hold, the lowest ever.

70% of households do not have kids younger than 18 at home.

29% of household decision-makers are under age 40.

17 states lost population in the last year, shifting West and South.

14% of the current population is foreign-born; we have 44 million immigrants.

These are among the numbers you need to keep in mind as you plan your marketing strategies, Parker noted. Webinar co-presenters from IRI were Kate Allmandinger, consultant, fresh foods and Amanda Evans, consultant, protein vertical. Parker said outdated beliefs still influence marketers. Post-COVID, she added, consumer demand hasn’t come back in the same path we had before.

84% of shoppers say they are changing their purchase habits. One of their most popular strategies is seeking sales tags on the shelf.

There’s opportunity to cash in on the trend to more entertaining in the home, with premium offerings and charcuterie boards. “What problems are you solving for consumers?” she asked. “Think about assortment, based not on the past but how you can differentiate.”

While food-at-home inflation is higher than food away-from-home, foodservice costs are more than triple that of at-home meal occasions. And despite double-digit price increases across retail foods, convenience and quality still drive sales.

IRI research shows that while consumers are seeking more convenience in meals, they are still striving to make meals a gratifying (indulgence, taste) and unifying (bonding with family and friends) occasion. The importance of wellness (health focus) is the least important driver of these three.

Other key findings: Basket units are falling more for Gen X and Boomers. High-income shoppers are trading down more than other income levels. And while 2020 saw more stock-up in fewer trips due to COVID, now there are more choiceful purchases and lower quantities due to inflation.

In 2022, deli department prepared foods and meals performed well, with unit gains by deli sandwiches, entrees, prepared meats and soups/chilis. While dairy has some of the highest price increases across the store, dollars continue to rise as the impact hasn’t deterred shoppers from buying. Eggs have the highest increase in cost per unit — up by 49.5%. Cage-free eggs saw only a 14.7% increase, whereas conventional eggs went up by 54.9%.

Butter and margarine have the fourth-highest increase in pricing in the dairy department, with pricing per unit jumping 26.9%. Among butter/spreads, European and sweet varieties are having the largest growth, according to IRI.

With 96% of shoppers concerned about food inflation, 84% say they are changing their purchase habits. One of their most popular strategies is seeking sales tags on the shelf. Foodservice trips are down, but while people are at restaurants, they are buying fewer sides and desserts. This presents opportunity for retailers to focus more attention on these categories.

At home, consumers at all income levels are eating more breakfasts and snacks, and 70% of lunches are still eaten at home. And what’s most common for lunch? Leftovers, salads and prepared sandwiches.

Foodservice operators such as McDonald’s, Chipotle and Starbucks are more aggressively pushing their offerings digitally, but “retail foodservice is not in that conversation, and could be,” Parker said.

GROWTH IN SUSHI

In retail deli, Evans explained that prepared foods are seeing large dollar growth, with units up a bit. Sandwiches, entrees and premium offerings are doing especially well, she added. There’s lots of growth in sushi, and special deals — perhaps once a week — is an opportunity to grow the segment more and assure shoppers that the product is the same high quality they can find in restaurants. 

Warren Thayer

Warren Thayer

Warren is the Editor Emeritus, Managing Partner for Frozen & Refrigerated Buyer.

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