inflation rising at 4.9%
which is less than a year ago, all the while, food prices still rose 7.7% between
April 2022 and April 2023 consumers don’t like it and are migrating to other
food brands or restaurants and that shift aka trial 61.3 percent of time leads
to customer migration according to Steven Johnson Grocerant Guru® at Tacoma, WA
based Foodservice Solutions®.
Are you selling what you always sold and selling it the same way? How is that
working for you?
according to industry expert Darren
Seifer, food & beverage industry analyst at Circana,
“Adding to the impact of food inflation are economic factors like increased
consumer credit debt, depletion of savings built during the pandemic, and
cutbacks on pandemic-related government credits and subsidies. To manage their
food spending, U.S. consumers are finding ways to manage higher food costs by
shopping at value retailers, spending less on non-food purchases, switching to
store brands and canceling committed expenses, like subscriptions.”
continued, “Consumers need to eat no matter what and will adapt to higher food
costs by finding lower cost options or cutting back on discretionary spending,
and that’s what we’re seeing play out now,”.
went on to say, “Seventy-eight percent of consumers plan to or already have cut
overall spending on products due to inflation, and 75% of those report that
their reason for cutting spending is higher food costs, according to Circana.
The low-hanging fruit for spending cutbacks is to decrease purchases of
discretionary retail spending and cancel subscriptions.”
then, in April, general merchandise retail sales revenue fell 7% compared to
April 2022, and unit sales fell 8%. Over a quarter of consumers said they’ve
canceled subscriptions over the past few months, and 66% of those cancelations
were for entertainment subscriptions, like streaming services.
team at Circana
reported, “Regarding food and beverage sales in April, revenue increased by 6%,
but unit sales fell by 2%. Eighty-six percent of annual eating occasions are
sourced from grocers and other retail outlets. This supports data that reflects
that at-home spending remains a more significant portion, 60%, of food and
beverage sales. The April CPI shows at-home food prices increased by 7.1%. To
mitigate higher food prices at retail, 49% of consumers said they shop at food
stores that offer lower prices, 42% reported they buy more store
brand/private-label food and beverages, and 41% said they buy essential items
only and forego impulse purchases.
away from home grew 8.6% in April compared to a year ago. In the 12 months
ending March 2023, foodservice costs were 4.3 times more than the cost of
at-home eating occasions, per Circana. The average cost of an at-home meal
purchased from retail was $1.78, and $7.48 away from home. This doesn’t mean
that consumers didn’t make use of foodservice. Coming off four consecutive
quarters without growth, visits to restaurants and commercial foodservice
outlets in the quarter ending March grew by 1% compared to a year ago. Still,
the use of foodservice shifted to less expensive dayparts, like breakfast and
morning snack or quick-service restaurants rather than full-service
manufacturers, foodservice operators and retailers can meet the needs of
price-sensitive consumers by understanding the best pricing and promotional
strategies,” said Seifer. “Also, consumers have returned to their pre-pandemic
routines, and aligning with their shifting needs will increase the value of
their offering.” It’s time to try to do things with a little more relevance, or
a twist. Youi just might consider doing somethings a bit differently.
Invite Foodservice Solutions® to complete a
Grocerant ScoreCard, or for product positioning or placement assistance, or
call our Grocerant Guru®. Since 1991 Foodservice
Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or