To counter rising costs, consumers are changing the way they shop this holiday
Here’s something you already know; inflation is driving up food prices. But as we enter the largely food-centric holiday season, how will that impact holiday food shopping behaviors?
Consumers want a normal holiday
Inflation concerns aside, consumers are largely looking to return to their familiar holiday traditions. Weary of restrictions and missing their families, 82% of consumers are planning to have an in-person Thanksgiving celebration this year, and 81% said they plan to have an in-person Friendsgiving, according to survey findings from Inmar Intelligence.
The same survey also revealed that the typical Thanksgiving meal mainstays of turkey, mashed potatoes, stuffing and green bean casserole will still dominate the dinner table. So, while the way consumers celebrate will largely look the same, their shopping behaviors for holiday food will look a little different.
Trips to the grocery store are getting more expensive
To shoppers, one of the most obvious sectors where the effects of inflation are being felt is in grocery. The cost of groceries has jumped 5.4% in the past year, based on additional data from the U.S. Bureau of Labor Statistics. Prices of meat and dairy items have been on the rise, as well as sugar and coffee.
For example, if a consumer wants to carve a turkey this Thanksgiving, they’ll be paying up to $0.25 more per pound than they did in 2020. If an average turkey runs around 15 pounds, that’s a $3.75 increase in just one year’s time. And that’s just for the main dish – shoppers still have to consider price increases across the board for every ingredient needed for preparing those nostalgic and time-honored family recipes.
If you’re interested in a deeper dive on the compounding factors impacting price increases – think, the cost of corn needed to feed the turkeys that will end up on dinner tables across the country – I enjoyed this article from The New York Times.
Now that I’ve set the scene a bit, let’s take a look at customers’ concerns, and how their sentiment will affect shopping behaviors this holiday season.
Consumers are preparing for rising costs this holiday season
If a customer feels anxious, they are certainly not alone – 53% of grocery shoppers are concerned about prices rising this holiday season, according to FMI. Their research also shows that 58% of shoppers have concerns about their ability to purchase groceries needed for holiday meals, either because of affordability or stock availability.
In the name of preparation and to alleviate the pain of rising costs, consumers have made some adjustments to their typical shopping behaviors. Inflation and supply chain concerns have prompted shoppers to:
- Purchase lower-priced items – Instead of buying higher-priced, name-brand items, another survey found that 49% of consumers plan to switch to more affordable options. Some are also preparing for the holidays by comparing prices between retailers to determine who is cheapest. Switching to low-cost brands is less likely among consumers with higher purchasing power, but certainly tops the list of changes many consumers are making.
- Be on the lookout for discounts and promotions – Grocery shopping can be expensive, especially when many families are feeding a larger-than-usual group of people. Consumers will be on the hunt for coupons and sales, most likely shopping at stores that are known to provide discounts to help save money.
- Cut back on discretionary spending – When faced with the question of where to cut back, many consumers are deciding to spend less money at bars and restaurants in order to save for groceries. These businesses have already been impacted by the pandemic, and this shift in consumer spending will ultimately exacerbate the hardships many restaurants and bars currently face.
- Shop earlier – Concerns around stock availability are pushing many consumers to shop for their holiday food staples earlier. According to Inmar Intelligence, 41% of consumers have already started shopping for holiday ingredients, and 34% have even already purchased their turkey.
Retailers can help keep shoppers’ grocery bills more manageable
Diving into your data will help you better understand how your consumers’ holiday food shopping behaviors are changing, and what you can do to better meet their needs. When you understand those factors, you might even be able to take price decreases where it matters most to your consumers. That would be a definite differentiator in the current landscape.
When you’re working to manage costs and also limit the pain consumers feel when you pass along those increases to them, it can feel difficult to know the smartest pricing moves. In a recent blog, my colleague Matt identified how not to price during inflation and outlined potential mistakes retailers can make.
Need more guidance for navigating inflation? Reach out to our experts and we’ll help make sure you’re prepared for changing consumer behavior over the holidays.