Grocerant Guru’s Suggest that Consumers Going Grocery Shopping Beware

 

Today while inflation is top-of-mind for most consumers when they go grocery shopping.  It’s at the intersection of product price and packaging that Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® believes consumers should be reminded of the phrase Caveat Emptor.  

In short, caveat emptor is a Latin phrase that translates to "let the buyer beware." In the context of grocery shopping, it means that the buyer has the responsibility to inspect and research a product before purchasing it, as the seller may not be held liable for any issues with the product later.

It's essentially the opposite of "buyer beware" – the onus is on the customer to be informed.

Caveat emptor is a principle that's less common today than it used to be, especially with regards to consumer goods. Many countries and regions have laws in place that offer consumer protections and hold sellers more accountable for the quality and condition of their products.

Many consumers today are going to the grocery stores finding higher prices and smaller packaging. This practice of keeping prices the same but reducing the amount of product in the package is called "shrinkflation." Here are some ways consumers can be aware of shrinkflation:

·         Pay attention to unit pricing: Most grocery stores will show a price per unit (ounce, gram, etc.) on the shelf tag in smaller print below the headline price. This allows you to compare products directly and see which offers the most for your money.

·         Track package sizes of your favorite items: Become familiar with the weight or volume of the products you typically buy. If you notice a decrease in size but the price stays the same, you're likely a victim of shrinkflation.

·         Compare brands and sizes: Don't just grab your usual item on autopilot. Take a moment to compare different brands and sizes to see which offers the best value per unit.

·         Stay informed: There are resources online and even social media communities dedicated to tracking shrinkflation. A quick search for "shrinkflation" can turn up news articles and forums where consumers share their experiences.

By being aware of shrinkflation and using these tips, you can be a more informed shopper and get the most for your grocery budget. France had some new laws to help keep consumers aware of shrinking packaging size and equal or greater pricing of products.

Here are five reasons why the US might consider adopting regulations similar to France's on shrinking packaging (shrinkflation):

1.       Increased Transparency for Consumers: Just like the French law, US regulations could require clear labeling on products that have undergone size reduction without a price drop. This would allow consumers to make informed decisions about their purchases, comparing price per unit instead of just the headline price.

2.       Combatting Deceptive Practices: Shrinkflation can be seen as a deceptive practice, since the packaging size suggests a similar quantity of product. Regulations could help ensure that consumers aren't misled about how much they're getting for their money.

3.       Curbing Inflation's Hidden Costs: While companies may resort to shrinkflation to avoid raising prices explicitly, it still contributes to inflation by reducing the value consumers receive. Regulations could help mitigate this hidden aspect of inflation.

4.       Encouraging Fair Pricing: With clear information about size reduction, competition could be fairer. If consumers become more aware of shrinkflation, companies might be less likely to resort to it as a hidden price increase, potentially leading to more accurate pricing practices.

5.       Potential for Broader Action: The French example focuses on shrinkflation, but the article also mentions "cheapflation" (reducing quality without lowering price). US regulations could potentially address both issues, promoting transparency and fairer pricing practices.

Foodservice Solutions® team is here to help you drive top line sales and bottom-line profits. Are you looking a customer ahead? 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.

Inflation Is Driving Change in Consumers Path to Purchase

 

At the intersection of price increases at the grocery store, restaurants, convenience stores, even most dollar store items are now higher than a dollar; that consumers are looking for meal convenience. According to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® are searching for convenient meal solutions at a price and are willing to shift meal periods by daypart while exploring new channels of fresh food distribution.

Today, morning coffee is more likely to be prepared and consumed at home, so retailers should even more closely monitor the amounts that are brewed to prevent excessive waste and how often the offerings are refreshed during the early hours. For stores with bakeries, that is also likely to affect the sales of breakfast pastries such as doughnuts, muffins and Danishes. Bundling these bakery items with lunch offerings may provide a way to boost sales in this category.

Consumers are not eating less, they are eating at different times of the day and getting meals and meal components from outlets that they had not tried before or wanted to try.  However, rising inflation resulting in higher prices for ingredients and the need to pass those higher prices on to consumers, grocery stores, restaurants and c-store retailers are all concerned about how these factors will affect their foodservice sales. In fact, research shows that inflation is the No. 1 concern for many retailers. Why because it is the No. 1 concern for consumers.

Every time the gas prices goes up, foodservice sales decline in one sector or another as customers have less discretionary money to spend on food. Inversely, when gas prices go down foodservice sales rise. Today consumers are experimenting with their nontraditional channels of distribution looking for a meal solution that does not include cooking from scratch every meal every day according to Johnson.

To maintain customer interest, retailers must constantly provide new and interesting menu items and promotions. Despite the relaxation of restrictions, many people are still working from home and, it seems, will continue to do so for the foreseeable future. For some legacy food retailers, fewer morning commuters has pushed the traditional breakfast rush to later in the day, more toward lunch time.

That said, limited time offers and promotions are most likely to be successful if they focus on lunch fare. Bundling can also work here as well to help build sales of items such as sandwiches and salads, sides such as chips, and hot and cold dispensed or ready-to-drink beverages.

Many consumers are most concerned about value rather than just price. They are willing to pay a little more for high quality and will accept smaller portions such as grab-and-go sliders and individual decadent desserts if the value incentive is there.

Don’t discount that fact that inflation can also make loyalty programs even more attractive to customers, making this an excellent time to promote them. Cents off and buy one, get one offers for loyalty members appeal to their thrifty side. Also popular with customers are promotions to buy a set number of an item to earn one free — for example, buy six cups of coffee and get the seventh one free.

The reduction of evening commuters has also had a negative impact on the dinner demand. As in the morning, consumers are more likely to prepare their evening meal at home. Many are also turning to services such as DoorDash, Uber Eats and Grubhub to deliver their food to them.

Consumers can be out and about at any hour of the day or evening, making any time a potential snack time. Retailers with roller grills should keep them stocked with fresh items to accommodate their appetites. Other grab-and-go items such as chicken tenders, pizza slices and sliders can also go beyond lunch to satisfy day or evening snack cravings. Where, when, and how are your customers getting their meal solutions?

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Consumer Food Shopping Discontinuity

Last week Heather Lalley pointed out in an article that inflation was driving consumers to make different choices when it comes to buying groceries.  So, the team at Foodservice Solutions® wanted to see if those choices held true for consumer in in the omni-channel grocerant niche.  Turns out they are very similar but we noticed a trend where consumers are buying more meals from the drive-thru.

When consumers were asked where Americans get dinner, most (77%) commonly eat at home or cook for themselves. 50% say they regularly get takeout or pick up, 31% say they go to restaurants, and 3% say they use a meal subscription box.

Looking at data from recent grocerant niche scorecards Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® found that 83.6% of all restaurant meals in 2022 are purchased from a fast food outlet or drive-thru.

Regular readers of this blog know that last week Walmart made headlines, when it lowered its earnings forecast, saying higher prices on food and other items were causing consumers to cut back. The largest retailer in the country also noted it was being forced to slash its prices to keep inventory moving.

Walmart’s announcement as Lalley pointed out “prompted analysts from the Royal Bank of Canada to declare they’re feeling “increasingly cautious on the state of the U.S. consumer.”

Lalley continued, “Food-at-home inflation soared 12.2% in June over the year before, a 40-year high, according to the Consumer Price Index. And the Federal Reserve on Wednesday approved a three-quarters of a percentage point interest rate hike, its second in a row, in an aggressive push to put a lid on inflation.

Even though economists have yet to declare a recession, 53% of Americans believe we’re already in one, according to the mid-year consumer report from NielsenIQ.

Here are six ways historic inflation is pushing consumers to change their grocery shopping habits—and how retailers can capitalize on them.

1.       They’re looking for lower-cost options.

Perhaps its no surprise shoppers are searching for deals as inflation soars. For some retailers, that means it’s prime time to promote private-label brands. Albertsons Cos., last week said its Own Brands line reached record-high sales penetration of 25.8%, with sales outpacing national brands in several categories.

During the first quarter, Albertsons launched 59 new Own Brands items, with a plan to roll out about 425 new products in the line this year.

“While much of the growth in Own Brands is related to increases in unpenetrated markets and product innovation, the breadth of our Own Brands portfolio from opening to premium price points also provides great value to customers who are trying to stretch their budgets,” CEO Vivek Sankaran told analysts, according to a transcript from financial services site Sentieo.

2.       They’re shopping less often.

Gas prices are finally starting to recede a bit, but they’ve no doubt had an impact on consumer behavior.

Thirty-four percent of consumers said they’re driving less, 25% said they’re shopping online and 24% said they’re shopping closer to home, according NeilsenIQ. Research from retail data science platform 84.51° put the number even higher, finding that 56% of consumers have reduced their driving because of high gas prices and 34% are grocery shopping less frequently.

Inflation, too, is prompting shoppers to visit the store less often.

By the first quarter of this year, food traffic to food stores had fallen 10% compared to the same period a year ago, according to location intelligence firm Gravy Analytics.

3.       But they may be looking to stock up when they do make it to the store.

“Instead of buying one avocado, they’re buying bags of avocado,” Albertsons’ Sankaran told analysts.

And half of all shoppers surveyed by Nielsen IQ said their top savings strategy is to stock up when things are on sale.

4.       They’re trading down and buying less of entire product categories. They’re even switching grocery stores.

Items such as butter, chicken, lunch meats and milk saw double-digit inflation in June.

More than a third (36%) of consumers said they’re currently buying less meat and fish, according to research from 84.51°.

And 16% of lower-income households said they’ve changed where they’re buying groceries to get the best deals, the firm said.

5.       They’re buying meals from grocery stores instead of restaurants.

Here’s some potential good news for retailers: Restaurant prices are soaring, too.

More than 30% of consumers said they’re going out to eat or ordering in less often than they used to. And 61% said they’re preparing food at home, up from 52% in June, with half of those surveyed saying they plan to dine out less frequently in the coming months, according to 84.51°.

Albertsons said it is seeing growing numbers of consumers, particularly those working from home, stopping into its stores for a prepared sandwich or salad.

“Our ready meals is doing so well,” Sankaran said.

6.       They’re becoming professional deal-hunters.

Kroger saw a 15% increase in site visits to its Kroger Digital Coupons page between May and June, 84.51° found, and 57% of shoppers reported being on the hunt for sales, deals and coupons.

But shoppers who can save money in one area may be willing to spend in another, Sankaran said.

“The consumer is clearly trading down,” he said. “They’re trading down on daily needs, but they’re also buying a lot of store-made sandwiches and meals. They are buying more hamburger, but they’re also buying organic meat … We’re seeing this behavior where people are value-conscious but are willing to spend on the things that they care about.”

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information.  

Food Inflation So Now What’s for Dinner

 

At the intersection of What’s for Dinner and food inflation the consumers is at a crossroad according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. The question become rather than What’s for dinner; where can I buy dinner for less?

Once again inflation for at the grocery store aka food at home soared to 11.9% year over year in May.  Which is a level not seen since April 1979, the Bureau of Labor Statistics last week. And inflation in the overall U.S. economy, after retreating slightly in April, climbed again in May, to 8.6%. 

There was also inflation at restaurants and other foodservice venues hit a 40-year high in May, too, although the spike 7.4% wasn't as high as in grocery. Full-service meal prices rose 9% year over year; prices at limited-service restaurants climbed 7.3%. That’s right the consumer was stuck right in the middle.

Like a stick poking you in the eye it was Gasoline and housing that were forcing consumers to rethink how and where to buy dinner.  Gas prices were up 48.7% year over year, and rent/homeowners' rent equivalent prices were up more than 5%.

 In a Battle for Share of Stomach

Are You Winning?

There was no doubt that food was a top contributor to May's inflation acceleration: Last month's spike in grocery prices was higher even than the 40-year highs recorded earlier this spring, with food-at-home inflation having reached 10.8% in April and 10% in March.

Month to month, grocery prices were up 1.4% over April levels, the fifth consecutive month of a 1% or greater increase, the BLS reported. Once again, prices rose across the grocery store. Five of six food-at-home categories the BLS tracks saw year-over-year increases of more than 10%. The lone category to come in under 10% was fruits and vegetables, with prices rising 8.2% over the past 12 months. 

Among the grocery items seeing notably high inflation in May:

·         Eggs, 32.2%

·         Butter and margarine, 20.2%

·         Chicken, 17.4%

·         Citrus fruits, 16.1%

·         Milk, 15.9%

·         Coffee, 15.3%

·         Ground beef, 13.6%

·         Baby food, 12.9%

·         Rice, pasta and cornmeal, 12.8%

How long will it be before consumers can only afford to eat rice, pasta, and cornmeal? Are you looking for options to drive customers to your retail food outlet? We have options.

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.