Though experts still are split on whether the U.S. Federal Reserve’s inflation-fighting moves will plunge the economy into a recession, consumers apparently aren’t waiting for the official figures, already trimming their grocery bills and choice of restaurants, the latest survey from Acosta indicates.
The analysis found nearly half of shoppers are adjusting spending patterns, convinced a recession is underway. Sixty-one percent of respondents said on Acosta’s survey they have reduced restaurant spending, 52% said they are spending less on entertainment and 47% said they are looking for deals, focusing on value, price points, assortment and promotions.
If brick-and-mortar retailers were hoping the easing pandemic would allow them to ease off on tech, they’re out of luck. The survey found though data show 90% of grocery sales still are taking place in-store, 61% of shoppers buy groceries online.
To cope with rising prices, 25% of those surveyed said they’re snacking more, and the number of at-home meals is increasing. But despite inflation, Acosta noted 28% of consumers said they’ve eaten one of their meals from a fast-food outlet because it’s cheaper than cooking at home.
“[On the plus side], more consumers are likely to cook a restaurant-quality meal at home, using premium products,” Acosta said.
ADVICE FOR RETAILERS
Grocers can benefit from loyalty programs that enhance the shopping experience and arrange stores to increase browsing behavior, as well as highlight certain products, Acosta said, noting convenience is an issue and that retailers like Walmart are moving to a “stack it high” model to allow shoppers to get in and out quickly.
Interactive product displays with smart screens that have reviews and QR codes that provide more information also are an option.
“Integrating elements of experiential marketing into retailer apps is creating the most seamless omnichannel shopping experience we’ve seen yet,” Acosta said.
With more and more personal data being collected, grocers have a unique opportunity to target their shoppers, making the in-store experience more personal.
INTRIGUE OVER PLANT-BASED PRODUCTS
Grocers also can benefit from the growth of plant-based products. That market is expected to grow globally to $162 billion by 2030, compared to $29 billion in 2020.
“Growth will continue even in the current environment because by purchasing and consuming plant-based products, shoppers make healthy choices for themselves, the environment, and animals. With 57% of shoppers stating they’ll buy plant-based foods for the rest of their lives, this behavior isn’t going away anytime soon,” Acosta said.
RESTAURANTS MUST CREATE LOYALTY
Restaurant dining is more complicated. Continuing supply chain issues, inflation and labor shortages all are impacting the dining experience.
“Unique value solutions, drive-thru technology innovation, and loyalty programs are some trends to watch in 2023,” Acosta said.
But costs still are being pushed up with foodservice workers now receiving $14 to $17 an hour, up 21% since 2020, and as unionization spreads, wage pressure likely will increase. Some companies are turning to robots to cope.
Chip West, retail and consumer behavior expert, at Vericast, told The Food Institute restaurants can overcome growing consumer reluctance by taking the opportunity to “connect and create loyalty. We’re also seeing that price sensitivity isn’t the same for all items and restaurants are employing varied pricing for different types of menu items according to demand.”
The Food Institute Podcast
Click the play button above to listen to the episode.
How are consumers changing consumption patterns as inflation pushes CPG prices higher? Ibotta SVP Chris Jensen discussed how consumers are gravitating towards at-home eating, tactics retailers are employing to maintain and grow their customer bases, and how loyalty programs can benefit consumers and retailers alike.