During the recent International Dairy-Deli-Bakery Association (IDDBA) webinar, “How Perishables Consumers are Adapting to Inflation,” Category Partners revealed findings and insights from a 2,000-respondent consumer survey in November. This webinar, hosted by IDDBA and conducted by Category Partners, examined topics like how long consumers anticipate the trend to last, consumer switching across package sizes, deal seeking, and other elements important to them.
Adam Brohimer is president of Category Partners, LLC a retail sector, business insights company founded in 2008, which specializes in driving growth by executing consumer and market research, data analytics and technology solutions. Cara Ammon, senior vice president of Category Partners, also offered insights during the informative session.
“Anybody who has a blog on YouTube is writing about inflation. There is a lot of buzz, but not a lot of clarity,” Brohimer says.
The Category Partners survey reveals that 93% of consumers surveyed express concern about inflation. Ammon pointed out the significance of this finding, adding “you hardly ever see 93% of people agree on anything.”
When consumers were asked whether they have noticed higher prices, groceries ranked No. 1, followed by gas prices at No. 2.
How long will it affect prices at the grocery store?
An estimated 80% said at least through the next year. Further, ages 45 to 64 exhibit the highest proportion of “extremely concerned.”
The survey found that 81% report feeling their household budget is being somewhat impacted.
In response to the pandemic, 33% report they are doing “significantly more” cooking at home. And due to inflationary pressures, 60% are eating at home more.
All formats in the retail sector are experiencing a traffic bump, with the highest being reported at Walmart, supermarkets, warehouse clubs, and discount grocery.
Consumers under 44 are making the largest uptick in trips to Walmart and discount grocery.
“All age groups are eating at home more, and those 65 and up are eating more at home,” Brohimer says.
Shoppers 55 and older are “somewhat likely” to shift to store brands.
Others are buying items with longer shelf life – 24% in the 25-34 age group and 30% for ages 35-44.
In the bakery, buying fewer items is the No. 1 response to inflation. Deal seeking is less pronounced than in other fresh departments.
“Men typically are more likely to order out more, so there is more room for men to scale back in the future,” Ammon says.
“What is the shocker is the magnitude of awareness. There is enormous movement for a lot of consumers. Consumers are buckling up for the long haul – 42% think this will last 2 years or longer.”
What should retailers do in response?
“Look for ways to create wins for the end consumer,” Ammon says.
The scoop at restaurants
The restaurant world is evolving in quite different directions than the supermarket sector.
In the recent webinar, “Evolving Buying Patterns of Chain Restaurant Patrons,” featuring The NPD Group's Stephanie Epperson, executive director, analytics, attendees got a crash course on findings from NPD’s Checkout service, which allows a unique look into how the same consumers are changing their behavior over time.
How has customer acquisition shifted for restaurants?
Who are the most important targets?
How loyal are customers and how do they spend their restaurant dollars?
“We expect to see moderate growth in 2022. Underneath the surface, things are always shifting,” Epperson says.
- Consumers under the age of 45 cut out 8 restaurant purchases vs. 2019.
- Consumers over the age of 45 cut out 15 restaurant purchases vs. 2019.
“There might be a sustained shift between older and younger consumers,” she says.
One of the most eye-opening findings relates to “light buyers” vs. “heavy buyers” at restaurants.
“Light buyers drive growth,” Epperson points out. “Light buyers increased purchase frequency and increased their spend per buyer by 21%. And average checks are 18% higher than heavy buyers. Heavy buyers cut out 19 purchases since pre-Covid levels. There is a lot of opportunity with light buyers. You have to know that a big portion of heavy buyers are going to lighten usage over time.”
Key strategies include limited-time offers (LTOs) and new product launches. There is a lot on the line to do this right, Epperson urges.
“When you have a less than stellar experience, this can have a detrimental effect on light buyers,” she says. “They might not come back at all.”
Overall, more dollars are going to snacking occasions, quick service, and digital purchases.
“Over half of Americans made a digital purchase at a restaurant in 2021,” Epperson says. “Americans have less regimented schedules, so we are seeing snacking trends really sustained.”
Functional visits to a restaurant dropped from 56% in 2018 to 45% in 2021.
What’s Ahead in 2022
The food and beverage industry has gone through tremendous change over the past 12 months. 2021 has shown us that this industry can adapt quickly and pivot in the face of adversity. But what lies ahead for 2022?
At a workshop presented by The Food Institute, Joan Driggs, vice president, Content and Thought Leadership, IRI, presented finding on 2022 consumers values that reveal people are seeking out four distinct things.
- Premium and indulgent
- Health and wellness
“Habits have been formed, and we have a whole new generation of cooks. More people are staying at home to work. We have a lot of new consumption habits,” she points out.
The labor situation has worsened, causing a stress on the entire system.
More than 100 million people – more than 38% of the working-age population – were not in the labor force in November, according to the Bureau of Labor Statistics, this at a time when wages are growing at an impressive rate and employers are begging for workers, with some 10 million jobs going wanting, reports The Food Institute.
The pandemic prompted many workers to rethink their priorities. Some 300,000 women alone have left the workforce, which is some 5 million workers below its level pre-pandemic.
“Many are opting out of service roles that our industry depends on,” Driggs says.