How are shoppers dealing with inflation? Insights for retailers and brands.
Canadian shoppers are clearly adjusting shopping patterns to fight rising costs.
It’s in your news feed, it’s in your bank account, and it’s in your local grocery store. It’s inflation, and sadly, it’s inescapable right now.
The causes and solutions that surround this issue are complicated, but one thing is painfully simple: prices are hitting everyday shoppers where it hurts, right in the wallet.
Few things influence shopper habits like price. As grocery brands scramble to understand how their customers are responding with every blow, we turned to the inside source on shopper habits: the shoppers themselves.
Field Agent asked 2,739 Canadian shoppers about how inflation has influenced and altered their grocery shopping habits over the last three months. Let’s take a broad look at inflation in the grocery world (both in-store and online), learn how shoppers are responding, and explore a few tools that give brands a leg up.
How is Inflation Influencing In-Store Shoppers?
Check that price tag. In grocery stores across the country, shoppers are seeing price changes. And everyone’s affected. In our survey of 2,739 shoppers, every single respondent shops for groceries in-store, with 61% visiting a brick-and-mortar grocery store multiple times per week.
Come along with us on a little drive to the grocery store, and tackle burning questions in three key areas: price, stock levels, and impulse purchases.
1. How are prices changing?
Have shoppers seen any price changes over the last three months? Unless you’ve been living under a rock since Christmas, you can probably guess the answer.
Surprise, surprise, prices are soaring. 95% of shoppers surveyed are well aware of higher prices, and over a quarter report paying “much higher” prices for their groceries. It’s a pain point many can’t afford to ignore.
2. How are stock levels changing?
Thanks to supply chain shortages and pandemic-era panic buying, low stock levels have plagued shoppers since before inflation reared its ugly head (anyone else still flinch at the mere mention of toilet paper?) Let’s check in with our trusty shoppers and see what they’re noticing in the grocery aisle.
Compared with prices, stock levels are more of a nuanced issue. 12% of these shoppers report an increase in grocery stock, and about 31% say they haven’t noticed any significant change at all. But a majority (57%) continue to perceive a drop in grocery stock compared to three months ago.
Why is this an important question for CPG brands? Simply put, customer loyalty drops with the purchasing power of their dollar (more on this later).
Translation: if your product isn’t on-shelf, penny-pinching shoppers are more than happy to swap for a competitor—especially if they’ll save a few bucks doing so.
3. How are impulse purchases affected?
Ah, impulse purchases: the unplanned (but well-deserved) candy bar, soda, or other goodie snagged at the checkout lane. For shoppers, impulse purchases are an afterthought. But for many CPG brands, they’re the prize-winning bread and butter.
When a dollar just doesn’t go as far as it used to, frivolous purchases are the first to be kicked to the curb. 53% of shoppers surveyed said they’re less likely to grab an unplanned treat while grocery shopping (19% are much less likely to do so).
Here’s a snapshot of what shoppers had to say about it:
I make a weekly grocery list based on flyer offers and stick to it. We don’t have room for impulse buys in our budget anymore and we tend to buy cheaper items as well. – Joanna D., British Columbia
Inflation means buying less impulse buys and us asking ourselves “do we really need that?” – Katelyn O., Ontario
Inflation isn’t only affecting what goes into physical shopping carts—digital carts are also feeling the pressure. 58% of our shopper sample said they buy groceries online at least occasionally, and 7% make such purchases at least once a week.
It’s a dirty little secret, but what’s in-stock on grocery store shelves may not be available on retailer apps for pickup or delivery. We asked self-reported online grocery shoppers if they’ve noticed any availability changes.
As on-shelf, so in-app. A majority of shoppers have noticed a downward trend in availability as they shop for groceries online or in-app. For CPG brands, that means more substitutions or missed sales.
I’ve been adjusting my grocery list, buy more cost efficient products and buy when on sale. – Irene W., British Columbia
How Are Shoppers Changing?
Now for the million-dollar question. We’ve explored what grocery shoppers are experiencing, both in-store and online. In light of inflation, are those changes influencing the way they shop for groceries?
The answer: a resounding “yes.” 82% of shoppers say they’ve adjusted their grocery-shopping habits due to inflation. We asked that subset to get a little more specific.
It’s worth repeating: when funds get tight, shoppers change what they buy. 74% of shoppers say they’re switching brands to save costs, and 75% are buying different groceries altogether (less meat, for example).
Discounts and coupons are looking more enticing to shoppers as well. 23% say that inflation has even influenced them to pick up a membership at a warehouse club like Costco.
To lower costs of my groceries I compare flyers from different food retailers and price match, use coupons, and being a member of some retailers to collect points to use on groceries.. – Ann L., Alberta
What does the industry need to do?
With shopping patterns shifting so significantly, it cannot be business as usual for retailers and brands. We need to think in terms of household budgets being a fixed envelope of funds and not something that is immune to tough decisions. A focus on value items and buying in bulk opens up new promotional opportunities but it will also have a significant impact on the supply chain.
Working collaboratively to ensure value items have increased supply over the Fall and Winter will be mission critical. For example, think about Christmas cookies. A tin that last year was $19.99 might now need to be priced at $24.99 to cover costs – but will the household make the $5.00 leap this year or will they switch to a lower priced alternative? Will they switch stores or brands to find that alternative because the $5.00 is just too much of an increase?
These are real problems that retailers, brands and shoppers will be facing in the back half of 2022 and into next year. The time to prepare is now.
Jeff Doucette is the founder of “Field Agent Canada” an on-demand panel of Canadian shoppers providing a suite of innovative services to Canadian retailers and brands. He can be reached at firstname.lastname@example.org