The consumer is telling us the cost of everything can’t keep going up. Consumers are cutting back on visits to their favorite restaurants and convenience store. If you are a retailer that means less money, in the till, less profit in the back at the end of the month. The questions Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® continues to ask is; How are you going to get those customer visits back? How long are you going to wait before you try to get them back?
Those lost customers are not eating less they are simply eating somewhere else according to Johnson. In a new survey released by NACS revealed that over the past three months, 59% of retailers said their customer traffic has decreased in stores, likely in large part due to high gas prices.
Regular readers of this blog know that convenience stores, which sell an estimated 80% of the fuel purchased in the U.S., rely on in-store sales, not fuel sales, to drive profits. But high gas prices are hurting customer traffic in stores and basket size: Nearly half of all retailers (49%) also say that those customers coming inside the store are buying less compared to three months ago when gas prices were $1.50 a gallon lower.
Retailer in that study also expressed concerns that elevated gas prices could also depress sales over the traditionally busy summer-drive season: 53% say they expect sales to be lower this summer than last summer, with only 25% anticipating increased sales.
Just look at some more facts, 80% of U.S. consumers said they are eating out less often as a result of inflation, according to a Morning Consult survey. And about three-quarters said they are going out to bars less often.
Now consider this, 72% said they were purchasing less meat and 68% said they were buying less alcohol, according to the survey. Overall, more than half of U.S. adults said they have changed their eating and drinking habits because of inflation.
Yet there is more, According to Placer.ai, visits to full-service restaurants have fallen dramatically in recent weeks while quick-service visits continued to grow, which the data firm suggested could be due to a “trade down” from more expensive restaurants to lower priced options.
The Consumer Price Index rose 1% in May from April, and 8.6% over the past year. Retail food prices are up nearly 12% over the past year and prices on many basics have taken off: Gas is up by 50% over the past year while energy prices are up nearly 35%.
The higher prices are squeezing ordinary Americans even as wages rise, raising concerns that consumers could cut back and help throw the economy into a recession.
Restaurant menu prices are not rising nearly as much as retail food prices, which help to backstop demand—food-away-from-home prices were up 7.4% annually last month, though prices at full-service restaurants rose 9%.
And 80% of economists said there is a bigger risk of “stagflation,” a combination of economic stagnation and strong inflation. According to Morning Consult, lower-income consumers have been more likely to say they have made adjustments. The survey found that those with children under 18 at home and those with household incomes less than $50,000 have been more likely to make spending adjustments than others.
Women were 13 points more likely to say that they have adapted to rising inflation. Women were more likely to identify themselves as the primary grocery shopper. How are you avoiding losing customers this year? Are you tracking your year over year customer counts?
Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization? Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook, LinkedIn, or Twitter