Several consumer trends have proved to be resilient over the course of the COVID-19 pandemic, according to speakers at Groceryshop 2022, providing retailers with a better understanding of what consumers want out of private label products.
Claire Davies, managing director at L.E.K. Consulting, detailed five resilient trends that retailers should be aware of: convenience, changing demographics, better-for-you products, ESG and interest in private label as a result of inflation.
Davies said that private brands were outpacing national brand growth before the pandemic began in 2020, but that the category is “really coming alive” as more consumers look to save with inflation persisting.
L.E.K. data showed that 80% of consumers expect to change shopping habits if inflation persists in the near-term. 35% of consumers say they will trade down to lower-priced items, and 20% say they have already switched to cheaper brands.
“You really have to look at ways you can defend your position against private label,” said Davies, speaking to any national brand representatives in attendance at the consumer trends panel. “How can you differentiate and justify the price differential, because they [private brands] are coming after you.”
Davies cited prepared food as a category of interest for consumers, as it meets the need for easy, convenient meals, and can often provide healthier options.
“We want healthy food and we want it quickly, that’s what consumers are looking for now,” she said. “By offering prepared foods, it’s actually preparing retailers to get consumers back into the store and filling their carts.”
Citing a recent survey, Davies said that when retailers are investing in their store, the majority are improving and adding space for prepared food offerings.
“Retailers are really investing in the space of prepared foods,” she said. “Prepared food is almost 50% of what retailers are investing in. That’s up 39% since last year… they’re investing in the perimeter. Things that are pre-prepared, like vegetables, pasta sides, things you’re finding in the freezer aisle as prepared foods, are also doing really well.”
Davies cited changing demographics as a key trend retailers should look out for as well, pointing out that as America becomes more diverse, flavor trends are changing and the demand for ethnic food products is increasing.
“Innovation is going to be critical, we’ve seen such a growth in ethnic flavor foods,” she said. “As retailers, you need to understand how you can get diverse consumers into your store, bringing in the right SKUs to make sure they’re shopping with you, and how to retain the traditional consumers. Addressing your assortment is critical."