Inflation hits meat, poultry and dairy, according to survey
Marketing, merchandising and supply chain solutions provider Symphony RetailAI recently released its 2021 Shopper Study detailing consumer grocery shopping habits. The 12-month analysis of 2.2 billion shopper transactions examines how categories are changing and why, with large implications for private label retailers.
“The breadth of private brands in stores today makes understanding the effects of changing customer behaviors critical to the success of the overall portfolio,” Symphony RetailAI head of HQ client delivery Josh McCann told Store Brands. “Retailers and private brand manufacturers alike must understand the importance of their brands to price-focused and quality-focused customers to drive the optimal price and promotion strategies. In-depth customer insights also enable private brand strategists to determine which products to prioritize in continuing to build out their brand portfolio. Knowing how customers react to price versus value at the item level in the current inflationary environment makes private brands a strategic lever to win.”
According to the study, because of inflation, traditional grocers are losing shoppers in the fresh categories of meat, poultry and dairy. Meat, poultry and dairy specifically are underperforming with price-sensitive shoppers, given the drastic increase in price with inflation at its highest point in recent history. Symphony RetailAI says this means that traditional grocers have to be strategic with price and promotional strategies given the declining customer base for these categories.
The study says that while the three aforementioned categories have dipped, fresh items are on the rise. For every 10 items in a shopper’s basket, four are fresh products. The report showed that shoppers on average have seven times more fresh items in their basket (43%) than items from the frozen category (6%). By comparison, the shelf-stable category makes up 29% of shoppers’ baskets.
Fresh is also a frequency driver, with fresh products being purchased as nearly as often (24.8%) as often as center-store items (22.5%), and twice as often as frozen (11.1%). The category is also growing, with fresh categories seeing an 8% growth in shopper households over the course of one year, compared to 7% for ambient, shelf-stable products, 6% for beverages and 5% growth for the frozen category.
“As evidenced by these insights, a limited view of aggregate shopper behavior across the store won’t lead to optimized decisions around price and promotional investments, especially with inflation impacting some categories more than others, as seen with meat, poultry and dairy,” said Charisse Jacques, SVP of global customer-centric retail services at Symphony RetailAI. “Retailers need a shopper-centric, AI-powered approach to differentiate their item and category strategies based on the importance of price or promotions to a given customer segment. If an item is extremely important to price-sensitive customers, the retailer can ensure the item is priced well to reverse any lost perception of value and further promote traffic and sales.”
The full report can be found here.