The saying goes “consistency is key to success,” but for the month of July, consumers very much fluctuated between what, how much, what brand, and where they purchase groceries as a reaction to the impacts of inflation — this, according to a new monthly category report.
In sum, “shopper choices are all but consistent,” said Anne-Marie Roerink, president of 210 Analytics LLC, a San Antonio-based market research and marketing strategies firm which put out the report, which surveyed 1,000-plus primary grocery shoppers.
Roerink added that “consumers don’t think month-to-month, but are reacting to the cumulative impact from years of high inflation in all areas of life.” (When comparing July 2023 to July 2020, prices have increased by 24.4%.)
Along those lines, the recent July category update from 210 Analytics (with data provided by Circana) found that during the same visit, consumers might purchase some premium products, while going ultra-value on other items.
The result? July was another month of single-digit food and beverage inflation for U.S. retail. Yet the Circana sales numbers show little to no improvement in unit and volume sales in most areas, according to Jonna Parker, team lead fresh with Circana.
The price per unit across all foods and beverages in the Circana-measured multi-outlet stores, including supermarkets, club, mass, super center, drug, and military, increased by 5.2% in July (the four weeks ending July 30).
The four July weeks generated $59 billion in total food and beverage sales, up 3.1% over July 2022, though unit sales trailed behind.
The sustained levels of inflation, record credit card debt, and low savings rates resulted in continued subdued purchases despite an uptick in promotions. According to Roerink, while promotions are gearing up across the store nearing 2019 levels, the depth of discounts isn’t always there, leading to subdued incrementality.
Here are some other key category and consumer behavior takeaways from the month of July, according to 210 Analytics:
Out of the ordinary spending
July fourth weekly sales grew year-over-year with the remaining three weeks down 2% to 4% in units/pounds. This illustrates the power of holidays and celebrations: 33% of consumers celebrated with friends and family and 25% organized barbeques or cookouts. In all, 58% of consumers did something out of the ordinary during the holiday weekend, with similar expectations for Labor Day.
Additionally, “Amazon Prime Day is a, well, prime example of creating your own success,” added Roerink. The July Circana survey found that 82% of consumers are familiar with Amazon Prime Day, and of those Prime members (64% of all consumers), 58% planned to shop for items such as apparel (25%), electronics (24%), personal/beauty care (22%) as well as items in pet, paper products, food, and beverages.
“Numbers like these highlight the massive opportunity to celebrate anything from National Chocolate Chip Cookie Day to National Chicken Wing Day,” said Heather Prach, vice president of education for IDDBA..
Home cooking is typically down during the summer and July 2023 was no exception: It was a big month for deli-prepared, with unit gains for all the big sellers. Notably, pizza in particular was up 10.6% in unit sales versus a year ago.
Meat makes holiday performance
Meat pounds have continued to move back to within a percent of year-ago levels and deflation in bacon, sausage, chicken, pork, and more, impacted dollar sales. In July, flat prices in combination with fewer units and pounds sold than last year resulted in meat dollar sales being down 1.2% year-on-year. However, on an annual basis, meat sales still tracked 1.0% ahead in dollars.
While pounds were down in July versus their year-ago levels, it was still better than the 1.7% decline seen in the 52-week performance. Additionally, the July fourth week showed strong results with dollar sales up by 2.8% year-over-year, and pounds improved as much as 4.3%. However, the other three July weeks were down in dollars, units, and pounds — yet again illustrating the power of holidays and celebrations.
Produce moves pounds … again
For the second time this year, fresh produce moved more pounds than year-ago levels. July 2023 fresh produce sales reached $6.2 billion.
“The holiday effect was strong for fresh produce,” said Joe Watson, IFPA’s VP of Retail, Foodservice, and Wholesale. “The holiday week generated $1.643 billion versus $1.503 for the last week of July. Additionally, pound sales increased by 4.5% during the week of the fourth versus flat results during the remaining July weeks.”
Watson added that produce sales benefitted from investment in price, plus retailers stepping up efforts in produce’s role in grilling, from campaigns on ‘how to grill veggies’ to on-pack ‘great for the grill’ stickers on a variety of produce items.
“While the dollar growth is slowing, it is good to see units and volume making a comeback,” said Watson. “The fresh produce performance is outpacing that of total food and beverages as well as frozen and canned.”
Seafood remains slow and steady
“Seafood is, by far, the smallest perimeter department and demand continues to be slow,” said Roerink adding that crab sales remain strong on favorable pricing, while salmon sales are 2.5 times that of the number two seller.
Seafood prices reflected below-average inflation across the board. In fact, fresh and frozen seafood prices were lower in July 2023 than in July 2022. Fresh shellfish and frozen seafood saw the deepest cuts in price, but fresh finfish is now also trending below year-ago levels.
Both fresh and frozen seafood managed flat or increased pound sales in July 2023. However, deflation pulled dollar sales below July 2022 levels as consumer demand has not yet caught up with the deflationary patterns. Frozen seafood sold as many pounds as in July 2022, but deflation pulled dollar sales below year-ago levels.
Deflation of dairy
“Egg prices are now trending much lower, affecting dollar sales, but dairy powerhouses cheese, milk, yogurt, and eggs are all holding their own,” according to Roerink.
As deflation has arrived, the year-on-year dollar performance for dairy is vastly different from what was seen throughout 2022, and the first quarter of 2023: In July, dairy dollar sales dropped by 1.9% overall. At the category level, growth ranged from 18.6% in the plus for cottage cheese to a decline of 22.5% for eggs. Eggs are lapping the months of 60%+ inflation.
Cottage cheese is still experiencing strong growth and natural cheese is a powerhouse in its own right as the second-largest seller behind milk, with very steady unit and pound performances.