High inflation in 2022 led consumers to private label grocery items in record numbers, with total sales hitting $228.6 billion, an increase of $23 billion over 2021.
With prices remaining high to start 2023, global business data firm dunnhumby has shared its latest Consumer Trends Tracker (CTT), showing that Americans believe that grocery retailers are earning a 35.2% net profit margin, 14 times higher than grocers’ actual net profit margin average of 2.5%, and that food-at-home inflation is 24.3%, double the annual rate reported by the U.S. Bureau of Labor Statistics.
“In this latest wave of our CTT study, we found that retailers are in a precarious position with their brand perception, since customers are vastly over-estimating grocers’ store profit margins and inflation rates, while they themselves are battling food prices,” said Matt O’Grady, president of the Americas, dunnhumby. “Retailers need to show they are empathetic to customers through their prices, their rewards/loyalty offers, and with messaging to best support shoppers during these challenging financial times.”
In the latest CTT, dunnhumby surveyed 6,012 consumers nationwide. When asked about 2023, only 22% of respondents predicted inflation and the state of the country would get better. 47% of respondents predicted inflation and the state of the country would improve three years from now. Over a five-year period, 54% of consumers were optimistic that their own finances and the state of the country will improve.
Many Americans remain food insecure. Of those surveyed, 31% of households reported they have skipped or reduced the size of a meal for financial reasons, while 39% of respondents under the age of 44 have skipped or reduced meal sizes.
Households with children at home were 8% more likely to skip or reduce meal sizes than adult-only households. Consumers living in Idaho, Oklahoma, Arkansas, Tennessee, and West Virginia reported the highest numbers, where over 40% had skipped or reduced the size of a meal in the last year.
The full CTT can be found here.