Consumers do not want Inflation or Return to Office

 

The battle within foodservice sectors for customer during lunch and breakfast has never been more intense according to Steven Johnson Grocerant Guru at Tacoma, WA based Foodservice Solutions®. It’s at the intersection of urban markets, inflation, and the daily commute that food retailers are batting for every last consumer’s and a larger share of stomach.

That battle is between grocery stores, restaurants, c-stores, dollar stores, and virtual food outlets. It does not mean anything that there’s no official designation of a recession yet.  The simple fact is retail foodservice consumers increasingly feel like they’re in one, and are acting like we are in one.

Krishnakumar Davey, president of thought leadership for CPG and retail at Information Resources Inc. (IRI), stated, “Consumers are responding to rising prices by shopping promotions, prioritizing value options, and trading down to avoid going without,” … "Retailers must have the tools to quickly adjust to changes in consumer preferences to ensure they are offering the right assortment at price points that appeal to price-sensitive shoppers, as well as their most valuable customers.”

There is new analysis from NielsenIQ, that shows that U.S. consumers increasingly feel like they’re in one. Although consumers are finally finding relief at the gas pump, necessities like food are still forcing shoppers to make difficult spending decisions, fueling a growing sense of unease. 

So, NielsenIQ analysts refer to this as a “consumer recession” — when the core habits of traditional consumption have shifted, forcing shoppers to behave as though a recession is already here. They consume less, shift their spend to value retailers and brands, and buy more items on promotion. Of those NielsenIQ surveyed, 53 percent said they feel they are in a recession right now.

Nearly half of Americans (45 percent) feel like they cannot afford their previous lifestyle, according to a consumer sentiment survey on inflation commissioned by NCSolutions (NCS), which helps companies improve their advertising effectiveness. The online survey was fielded among 2,141 respondents in June. 

·         Additionally, 85 percent of respondents indicated they are very concerned or extremely concerned about inflation, and 93 percent said we’re in an inflationary time. One in four Americans believes a recession will occur in 2023.

·         76 percent say their family has changed how they buy food;

·         46 percent say they’re buying fewer non-essentials;

·         45 percent are seeking out less expensive brands;

·         43 percent are seeking out sales and promotions to afford their favorite brands; and

·         24 percent are shopping closer to home.

“For the second time in a little over two years, consumers are pivoting to new purchasing behaviors at the grocery store,” commented Alan Miles, CEO of New York-based NCS. “Since the start of the pandemic, they’ve been swapping their favorite brands for what’s available. Today, though, value is the centerpiece more often than availability; consumers are selecting brands and products to stretch their budgets as far as possible.”

Lori Stillman, vice president of research and education for convenience and fuel retailing association NACS, "While a recession may bring minimal temporary relief to the rising costs of labor in convenience, other costs such as utilities, insurance, maintenance and, especially, swipe fees will likely continue to remain elevated,” she said. “Price inflation in 2022 is different than what we have seen in the past. There are true supply issues causing prices to increase, not just increased demand for readily available products.”

According to Stillman, the conditions will require convenience store retailers to become more engaged with suppliers in pricing discussions, more discerning in terms of reviewing invoices, and more agile when it comes to enabling price changes. Retailers that are food focused will have to ramp up their menu costing and rationalization efforts to ensure their food programs remain profitable.

“With the expectation of decreased inside traffic, cost control will always separate top performers from the rest of the pack during a recession,” the NACS executive said. “On the other hand, growth-minded retailers should remain vigilant. The coming months will likely present opportunities for growth by acquisition of companies that aren't able to weather bumpy economic conditions, or feel the time is right to exit the industry.”  Are you looking a customer ahead?  How do you plan to get new customers or keep the old ones?

Foodservice Solutions® team is here to help you drive top line sales and bottom-line profits. Are you looking a customer ahead? Does your messaging look more like yesterday that tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may the clue you need to propel your continued success.

I a Battle for a Greater Share of 

Stomach

Are you Winning?