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Rising grocery prices gnaw at shopper loyalty - Supermarket News

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Escalating food and grocery prices have many U.S. shoppers rethinking their loyalty to retailers and brands, surveys by Inmar Intelligence and Shopkick reveal.

Of 1,000 U.S. adults polled on May 10 by Inmar, 89.7% reported seeing an increase in prices of groceries and everyday household items they buy regularly. The price hikes have led 68.4% of respondents to shop at a different store for those items. 

What’s more, shoppers expect help in dealing with rising prices. Winston-Salem, N.C.-based Inmar found that although 51.6% of those surveyed understand rising prices reflect current challenges as the nation climbs out of the COVID-19 pandemic, 41.4% think retailers and brands should find solutions to rein in pricing for consumers, who indicated that they will switch stores to save money.

Inmar IntelligenceInmar_grocery_pricing_survey-switch_stores.png

Indeed, value-focused retailers appeared to gain grocery shoppers since the onset of COVID-19. When Inmar asked consumers where they primarily shopped for groceries before the pandemic versus where they now shop, retailers that gained included Aldi (5.1% before pandemic/8.1% currently), Target (6.3% before/7.1% currently), Meijer (2.2% before/2.9% currently) and Albertsons Cos. (8.2% before/8.7% currently).

Among consumers surveyed by Inmar, retailers seeing decreases as the primary grocery shopping venue since the start of the pandemic included The Kroger Co., Ahold Delhaize, Whole Foods Market, Schnucks Market, Publix, Wakefern supermarket banners (including ShopRite) and H-E-B.

Inmar IntelligenceInmar_grocery_pricing_survey-retailers_chart.jpg

Savings was a key factor when consumers were asked what would lead them to change the store where they regularly shop for groceries and daily staples. Among the reasons cited were the amount of incentives offered (24.4%) and loyalty program (15.6%).

According to latest data from the U.S. Department of Labor, the Consumer Price Index rose 4.2% (unadjusted) over the last 12 months through April, the largest 12-month increase since September 2008. That includes a 2.4% uptick for food pricing, reflecting increases of 1.2% for food at home and 3.8% for food away from home. On a seasonally adjusted, month-to-month basis, the CPI edged up 0.8% in April, including a 0.4% increase for food (0.4% food at home, 0.3% food away from home).

One strategy that shoppers have embraced to save money amid rising prices is to buy more store-brand products. Of consumers polled by Inmar, 86.9% are putting private-label items in their shopping carts, with 56% saying they consider store-brand items cheaper than national brands. Also to help thwart price hikes, 61.7% of shoppers have joined more than one loyalty program offered by grocery stores, and 52% said they’re considering joining a wholesale discount club to save money on purchases, reported Inmar, a provider of data-driven technology services for retailers and manufacturers, among others.

“The rising cost of groceries in the U.S. has certainly not gone unnoticed by today’s consumers. Shoppers are returning to physical stores and restaurants, but at the same time still recovering from a global pandemic and expect to get value from their shopping experiences,” according to Spencer Baird, executive vice president at Inmar and president of its MarTech division. “The survey findings show just how quickly a consumer will change shopping habits in the name of cost savings. This should be a wakeup call for retailers, who must work to provide a seamless omnichannel experience with personalized promotions and coupons to maintain and strengthen that customer relationship.” 

Rewards app provider Shopkick found similar price sensitivity among grocery shoppers. In a Shopkick online survey of more than 19,000 U.S. consumers May 14 to 17, 86% said they’re experiencing price increases on everyday goods and services, namely groceries (96%), gas (93%t), eating out (57%) and apparel (42%). 

Redwood City, Calif.-based Shopkick noted that respondents reported price hikes across grocery categories, including meat and seafood (cited by 79% of shoppers), dairy (76%), fresh produce (71%), paper products (66%), beverages (60%), cleaning supplies (59%), personal care items (45%), bread and bakery (43%), cereal (40%), canned goods (37%), snacks (35%), and pasta and grains (26%). 

As a result, 59% of those polled said rising prices are pushing them away from their typical grocery choices and toward less expensive options. In turn, 69% noted that brand names have become less important, compared with 85% who said so at the start of the pandemic. 

That’s lifting the popularity of private label, according to Shopkick. Sixty-three percent of consumers said they’re now selecting less-expensive private brands. Also, 71% of respondents indicated they will continue to buy private labels even if prices return to normal levels.

Underpinning such decisions is the high consumer awareness of rising inflation. Shopkick found that of the 77% of consumers aware of increased inflation rates, just 4% expressed no concern about the risk of continued inflation. And even though the Federal Reserve said the inflation uptick will likely be temporary, 54% of survey respondents said they’re very concerned. In response, 42% plan to tighten their overall budgets slightly and 41% plan a significant budget tightening. Seventy-two percent of shoppers reported that their income hasn’t increased over the past year.

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