After months of inflationary pressure, how are the world’s shoppers holding up?
Rising prices, dwindling economic stability, and a trend towards value-seeking behaviours. It’s been some time since we last checked in with grocery shoppers from around the globe, but when we did – in our September 2022 Consumer Pulse study – they were clear about the financial pressures they were feeling.
Now we are more than one year on, do those worries persist? Have they become worse? Or has the situation gradually begun to ease? To find out, we spoke to more than 2,800 shoppers across Europe, South Africa, New Zealand, and the UK. What immediately became clear from doing so is that, while each one of those markets has its own dynamic, the world’s shoppers are largely united in their response to those megatrends mentioned above.
As could be expected, that response is one in which the primary priority is value. At the same time, and in spite of continued turbulence and uncertainty, we do see hints of change. Health, wellbeing, and environmental responsibility are all creeping back on to the consumer radar – indicative of the fact that, even in tougher times, many shoppers are determined to make the “right” choice wherever they can.
To find out more on that – and what else they have to say – please read on for the results of our latest Consumer Pulse.
Economic troubles – both personal and national – continue to mount
In our previous study, three-quarters (75%) of shoppers told us that they felt their national economy was in poor shape . A smaller – but still significant – number (57%) said the same of their own personal finances. One year on, and that concern has only deepened. 85% of shoppers now believe that their economy is in trouble with 61% stating the same of their own financial situation.
The increase here may be slight, but it makes for a stark message all the same: the world is still a long way away from being in a state of economic stability. This tallies with what we see in the OECD’s Consumer Confidence Index, which is currently at one of its lowest points since the 1970s.
Perceptions about the price of goods have changed dramatically
In September 2022, sentiment about price increases was near universal: back then, 93% of our respondents told us that they believed the cost of groceries to be “a lot” higher than it had been a year before. Today, plenty of shoppers still believe that to be the case, but the number who do has seen a steep decline.
In total, 73% of those surveyed said that they felt grocery prices were significantly higher than they were at the end of 2022. Shoppers from the UK (81%) and New Zealand (84%) are more inclined to believe that to be the case, while those from Italy (72%), France (67%), and Germany (62%) are increasingly likely to say they’re the same or lower. Overall, only a third (33%) say that they’re now spending more on each trip to the store.
With all of that said, it is important not to lose sight of the fact that a significant number of shoppers still believe prices to be rising. That makes the importance of loyalty programmes – which 45% of customers say help them to save money – ever greater.
Value seeking strategies are still in effect
While there’s a clear decline in the number of shoppers who think that prices are rising, that doesn’t mean that their behaviours have undergone any kind of fundamental change. Value-seeking strategies are still being employed, with many making proactive choices about where and how to save money.
With over half (56%) stating that their money “doesn’t go as far as it used to”, many say that they’re sticking to predetermined shopping lists (38%),only buying certain items when they’re on sale (also 38%) and opting for private label products when available (37%). Support for these behaviours is broadly in line with what we saw in 2022, suggesting that there is a consistent – if not overwhelming – focus on value.
In-store remains the channel of choice, while online usage drops
The physical store is still the primary destination for most shoppers: 97% of those surveyed said that they’d made an in-person trip in the week leading up to the study. In comparison, only a fifth of shoppers said that they’d placed a click-and-collect order in the past week (20%), with around a quarter having an online order delivered either by the store (24%) or a third-party service (26%).
At a global level, this means that ecommerce-based shopping is down considerably from the peak of the pandemic, when we saw around half (51%) of customers making at least one online shopping “trip” per week. Although Covid’s dwindling impact is obviously key here, so too are the cost of living issues mentioned above, with shoppers evidently keen to seek out value in person.
If the popularity of online as a channel may have waned a little, loyalty is now on a different path. 40% of respondents say that they do most of their shopping at the same store, an identical number to that which we saw last year.
While that’s still much lower than the 49% we saw towards the end of 2021, it does at least indicate that this decline has halted.
The priority for retailers going forwards will be to keep hold of the customers that stuck with them – and win back those who strayed.
Good base pricing is the key to value perception
In that quest to retain and acquire customers, some of the levers that retailers have at their disposal are clearly more influential than others. When weighing up the value for money that a retailer delivers, shoppers tend towards one issue above all: good base prices on fresh produce (90%).
While that might be the main concern, a few other capabilities help to shore up a retailer’s value proposition, too. Customers are keen to know that the price they pay is a fair reflection of the size of their basket (86%), that they can trust the price they see at the shelf (also 86%), and that a retailer will price consistently, communicate any price changes clearly, and be competitive on products that are important to them (all 84%).
Health and sustainability are creeping back up the agenda
One of the major issues we saw in our previous study was that a growing number of shoppers seemed to be putting health and sustainability to one side due to growing pressure on their finances – and understandably so. In line with their thoughts around the price of goods, however, we now see evidence that those considerations are creeping back up the customer agenda.
Almost half (47%) of customers agree that eating healthily makes them feel good, up by some margin from 2022 (39%). In turn, 41% say that they try to choose healthy foods when shopping, and 31% that they find the nutritional information on packaging helpful in pursuit of that goal.
On the environmental side, on the other hand, we see a distinct gap between awareness and action. Despite 52% of respondents saying that they’re concerned about the environment (up from 43% in 2022), only a fifth (21%) say they’re committed to buying sustainable products. With price (32%) being seen as the major barrier here, customers clearly feel that retailers and suppliers have a role to play in helping them to minimise their environmental impact.
Customers are clear on what they plan to do next… and what they don’t
Knowing what shoppers are already doing can only take us so far, of course. With that in mind, we also used this latest study to see what shoppers have planned for the future. For most, the focus seems to align with the point above. Around a third said that they plan (or will continue) to buy products that come from local farms and businesses (32%), with a similar number saying the same about buying organic and natural produce (31%).
As could be expected, this positivity isn’t universal. Asked what they don’t plan to do in the future (and aren’t doing currently), respondents pointed to a few issues in particular that seem to hold little appeal. While many say that they’re unlikely to have meal kits (72%) or ready-to-eat food delivered (64%), shoppers’ main objection is with artificial intelligence: three-quarters (74%) reject the idea that they’d use AI to help them shop in the future.
Are shoppers sceptical of the value that AI could provide? Untrusting of the technology as a whole? That remains to be seen, but there is clearly some way to go before the concept of AI-assisted shopping attracts widespread support.
For retailers and consumer-packaged goods (CPG) brands alike, the results of this latest study pose a number of questions that must be answered:
- How can you move from insight to action, leveraging these trends and planning your investments in such a way that gets you closer to your customers than the competition?
- To what extent will the attitudes on show here influence actual behaviours, and how could that impact your topline performance?
- How can you reconcile the divergent needs of different customers? Moreover, how can you satisfy the sometimes contrasting priorities of individual shoppers? What is the best way to approach this challenge without oversimplifying?