May continues to tell the story of moderating inflation, however, the impact was felt in the sales numbers for the month — as some departments sold more pounds, they still reported lost dollars due to deflation.
According to a May survey of 1,000-plus primary grocery shoppers, 20% expect they will travel a bit more this summer than in the summer of 2022, citing inflationary pressures that are challenging some travel plans, reports consumer behavior research company Circana.
The data points to fewer and shorter trips and staycations, which are both areas of opportunity for grocery retailers. It also shows more than eight-in-10 shoppers are looking for deals and applying multiple money-saving measures when buying groceries — shifting dollars between retail and food service, channels, products, and brands.
When it comes to inflation, the update shows an increase of 6.9% in May across all food and beverages measured in supermarkets, clubs, mass, supercenters, drug, and military stores. While the numbers continue to moderate when compared to the same four-week period in 2020, prices have increased by 23.3%.
Here are some other key category and consumer behavior takeaways from the month of May, according to analytics firm 210 Analytics:
Packing on the produce pounds
The produce category could not hold on to the positive pound performance seen in April, with both dollars and pounds trending about 1% below in May vs. year-ago levels. Most notable is that Memorial Day impacted weekly produce sales in comparison to a non-holiday week. Six out of the top 10 fruits (think berries, melons, bananas, etc.), sold more pounds in May 2023 than in May 2022.
What’s more, berries continued to be a powerhouse selling twice the size of the No. 2 seller and achieving a 3.3% gain in pounds. Fresh vegetables, on the other hand, reported dollars and pound numbers that were all over the board. Vegetables still had the better volume performance in May.
Frozen potatoes make a comeback
Frozen food prices increased 8.9% for the month of May, and dollar sales growth over 2022 levels was supported by most areas within frozen. Some exceptions were meat/poultry, seafood, and beverages, where the unit declines were not offset by the increases in price.
Frozen potatoes/onions, fruits and vegetables, and desserts/toppings saw the biggest sales gains, despite a 42.3% increase in the price per pound between May 2022 and May 2023 for frozen potatoes/onions. Even so, fries and fruit were the biggest frozen sellers, followed by mixed vegetables.
Deli has a reason to celebrate
While all departments had strong sales the week of Memorial Day, when consumers decided to splurge a little it was evident in deli prepared and deli entertaining. Larger trays and platters boosted volume sales by 2.6%, and deli-prepared foods were the biggest seller in the deli department.
Cheesy dairy demands
Dairy demand benefited from deflation. With egg and other prices falling steadily, units were flat against May 2022. Cheese and cottage cheese also experienced real growth.
Center-aisle bakery boost
Center-store bakery was the slightly bigger seller compared to perimeter with increased dollar sales by +9.7% in May 2023 versus a year ago, but the perimeter bakery had the better unit performance. Small indulgences, such as cookies and donuts, are outperforming other areas.
Seafood starts to deflate
Fresh and frozen seafood sold more pounds in May 2023 than in May 2022, but deflation pulled those dollars below year-ago levels by -2.2% and -3.8%, respectively. This was driven by deflation in shellfish whereas finfish had a small uptick in year-over-year prices. Frozen seafood prices were also lower in May of this year compared with last year’s May. Fresh salmon, crab, and lobster prices continue to become more favorable, and in frozen the average price per pound for shrimp decreased by nearly 4%, whereas salmon increased by as much.
Meat loses weight
Meat experienced deflation as chicken prices dropped below year-ago levels for the first time in many months. But deflation added to slightly lower volume sales, for a year-over-year dollar decline of 1.5% in May. On an annual basis, meat sales still tracked 2.4% ahead in dollars, but pounds were 1.7% below the 2022 levels. The two biggest sellers, beef and chicken, were very different in May: Beef experienced a 2.2% decrease in pound sales, whereas chicken pound sales increased 1.8%, which is fairly typical for recessionary and inflationary patterns. Chicken and fresh exotic (i.e., bison) were the only two areas that increased pound sales in May 2023.