Inflation has pushed prices higher, especially over the past months, and affects how consumers shop and eat. Data collected from 210 Analytics found that 76.8% of all meals were prepared at home for most consumers in August. Historically, data has shown that people cook less at home during summer and eat out more. But this year, it was simply too expensive for many consumers to do that.
Independent retailers are well aware of the rising costs in their stores. It’s pulled customers away from their stores in favor of big box stores or lower-priced grocery chains. In a survey from PYMNTS of 2,600 consumers, 47% admitted they have started going to cheaper merchants. Unlike big box chains with much larger supply chains and profit margins that can pivot to lower prices or strategies when needed, independent retailers cannot make pricing adjustments as quickly in their stores. So, what can independent retailers do to keep consumers coming back? Here are a few strategies based on current consumer shopping habits.
- Highlight your produce section. Produce purchases remain strong, with sales in August reaching $7.5 billion, outpacing all other food products. While prices may rise, produce is an area where customers are unwilling to sacrifice and still choose fresh as often as possible. Independent retailers can attract more customers with a good produce section offering or by pairing up with local produce suppliers or farms to offer seasonal fruits and veggies at a lower cost for consumers.
- Focus on basic fresh meat options. When prices rise, fresh meat cuts and seafood are some of the first things consumers cut from their shopping lists. In the past year, chicken has been the only protein to have increased pound sales, and beef sales continue to drop, except for ground beef. For seafood, year-over-year volume declines continue for both frozen and fresh food. If you notice similar trends in your store, it may be wise to focus on offering fewer specialty cuts of meat or seafood and stick to basic staples to attract customers.
- Remember the staples, like eggs. Do you recall last year when the price of eggs was soaring? Well, the crash is coming. Egg prices are dropping fast, driven by better stability in the poultry community after the avian flu and inflation-induced supply costs drove them up so high. Eggs are a staple in many households, and now that prices are dropping, you can expect to see more customers regularly buying them. Offering discounts or price reductions on household staples, like eggs, milk, bread, etc., is a great way to bring customers into your store. They need those things each week, so if they see a deal (like what is happening with eggs now), you can help them get the basics and highlight add-on items that your store specializes in.
- Re-evaluate your shelf management: Did you know cereal sales have been dropping for years? Customers are switching to protein and fruit breakfasts over sugary cereal options. Many retailers devote much shelf space to breakfast cereals, which may no longer be paying off. It’s essential to ensure that your shelf management strategy aligns with what’s driving profits in your store. For example, you could reduce offering as many cereal options and have more space in your breakfast aisle for other products!
When grocery prices rise, the real changes typically don’t happen for months. Consumers may initially accept the rising costs or fail to pay attention. But when the trend of higher prices continues month after month, consumers start to change their lifestyles. We’re at the point now where prices have risen so much and for so long that consumers are dramatically changing how and where they shop. As an independent grocery retailer, you must pay attention to these shifts in your consumer base and adjust your strategy to the current shopping climate. If you need help, reach out to us. We have strategies and tools in place to help your business stay competitive amidst these confusing times.
