Inflation is painful for food shoppers, but it’s also been a challenge for grocery industry professionals.
Over half of those polled project center-store unit volume to grow, with the largest percentage expecting a 2% to 4.9% uptick.
“At this time, and probably for the next 18 months, price is still the most important factor for 80%-plus of consumers. Where they shop could change significantly (traditional supermarket versus Walmart),” one survey respondent wrote.
The food-at-home CPI for August climbed 13.5% (adjusted) year over year, topping the 13.1% rise in July and marking the biggest 12-month increase since the period through March 1979, according to the U.S. Bureau of Labor Statistics (BLS). Despite a month-to-month letup in August, the food-at-home index has risen steadily on an annual basis since the start of the year.
“Right now, everyone is looking for the cheapest items,” one SN poll respondent said of grocery customers
Some 43% of you said high food price inflation has lifted your center-store sales number 5% to 10%, and 23% reported seeing an increase of less than 5%. Eleven percent have tallied a center-store sales gain of over 10% due to inflation.
“Supermarkets are facing challenges due to cost differentials between the dollar stores and the major warehouse stores, Costco and Sam’s,” one survey participant commented.
“Raising prices is a difficult challenge, since the consumer is a little sensitive about price increases. Fuel pricing right now is easing somewhat. However, they [consumers] will need to see more decreases to change behavior.
“Private label offers good/better/best products at a ‘discount’ from national brands,” one survey respondent noted.
To capitalize on the value proposition of own brands in the center store, 46% of those polled plan new product innovations.
“Adding private-label options in more categories provides consumers with more choice and better value for their dollar,” explained one participant in SN’s poll.
Club stores were cited as the top center-store threat to supermarkets this year (5% in 2021), 13% cited dollar stores (10% in 2021) and 11% pointed to limited-assortment discount grocers (5% in 2021).
Just 8% called direct-to-consumer channels a competitive threat, dropping from 19% last year, when DTC was No. 2.
“There's no reason to play Walmart’s game,” a survey participant said, explaining that supermarkets shouldn’t waste valuable shelf space with slow-moving items or stock too many items.
“Try and control pricing structure and offer more aggressive promotional offers to avoid transition purchase to private label,” one respondent recommended as a way to combat shopper trade-downs.
Get to know your customers better, another survey respondent suggested: “Understand what shoppers in your store buy elsewhere, then market to them based on that understanding.”