As with many industries, inflation is reshaping consumer approaches to the grocery industry. Home cooking is giving restaurants a run for their money, sustainability is top of mind, and private labels have become the cool kids on the block. Let’s dive into seven grocery trends we’re expecting to see in store in 2024.
1. Inflation Is Changing Grocery Behaviors
After a few years of higher-than-average inflation rates, consumers are paying closer attention to their budgets. More than 70% of shoppers are concerned about the high prices of groceries, especially since 60% of people say groceries comprise a greater share of their income this year vs last.
As a result, more than half of people are looking for ways to save money, an increase of more than 10% over last year.
Some shoppers are choosing new retailers with more competitive pricing. For example, budget-conscious shoppers are moving to independent grocers for their fresh meat.
2. Food and Beverage Is Shifting Down the Value Chain from Restaurant to Retail to Hybrid
Shoppers are actively combatting inflation by moving their food and beverage spending further down the chain. About 20% of shoppers are actually buying more groceries to bring their food and beverage budget under control. This is because more than 50% of people intend to cook at home more often in 2024.
This shift to home cooking shows up in three different ways.
First, up from 17% last year, 25% of shoppers now say they are substituting some restaurant experiences for grocery store experiences. Compared to the costs associated with restaurants, including service charges and tipping, grocery stores can take this opportunity to attract budget-conscious shoppers.
Shoppers are on board as more than 50% say that grocery-prepared food is a good value, even when compared to the lowest-priced fast-food restaurants.
Grocery retailers like Publix are making this jump easier for their shoppers by mirroring food trends in their ready-to-eat sections. Similarly, Dom’s is creating more engaging seating areas in their stores.
Second, we’re seeing an increase in consumers creating hybrid meals that combine freshly prepared food from grocery retailers with home-cooked items.
Grocers can appeal to this hybrid meal trend by leveraging their fresh meal prep capabilities in more luxurious ways with premium or artisanal salad bars or sushi bars, or by providing more fresh, hot mains and side dishes like the ever-popular rotisserie chicken and mashed potatoes
And third, consumers are recreating the luxury of restaurant meals in their home-cooked meals. Inspired by social media platforms like TikTok, shoppers want grocery solutions that will help them recreate high-quality meals at home, perhaps with more indulgent ingredients like spice blends or luxurious oils.
3. Private Labels Are Increasingly Respected and Desirable
In an effort to combat inflation, consumers are becoming more comfortable with private label goods.
Impressively, 95% of shoppers buy private brands occasionally and 46% of shoppers buy private brands most of the time.
Though 37% of shoppers buy private brands to save money, 63% of private brand shoppers believe those brands are a good value. In fact, 83% believe that the quality of private-brand goods is equal or superior. This explains why more than 40% of people intend to buy more private brands, an increase of nearly double from last year.
In the first half of 2023, the sales of private labels grew 8% and their share of sales increased to 18%. As such, it makes sense that 80% of food retailers intend to invest more in private brands
4. Contextual Commerce Has Taken Off
Social media used to be all about birthday cakes and food pictures. Today, it’s an essential component of each stage of the path to purchase. In just a couple of years, e-commerce will comprise 23% of global retail sales, and 80% of ad agencies believe that social media is a mandatory channel for CPG retailers.
Because social media is a prime driver of interest and awareness, brands need to be present in relevant ways on popular social media channels.
- 54% of consumers learn about food and cooking through social media channels like TikTok and YouTube
- >80% browse food blogs and recipe sites for meal inspiration.
Once people decide to shop, they actively consider brands they’ve seen online.
- 78% say they remember the brands they’ve seen online.
- 78% say they are more likely to buy a brand they saw featured in an online recipe.
Purchase isn’t confined to intentional in-store grocery experiences. To increase impulse buys and avoid in-store abandonment, brands need to ensure purchase functionalities are available on any social media channel that features their product.
- 63% use apps in-store while they are grocery shopping.
- 80% do online product research while shopping.
- 52% have bought something online while carrying out another activity.
5. Sustainability Matters More than Price and Brand
For grocery retailers that need an external incentive to plan for the future, by 2030, more than 15 sustainability-related regulations related to packaging, labeling, and food waste will go into effect in the USA.
However, most shoppers need no incentives to be more sustainable. About 70% are already taking steps to reduce their environmental impact and more than 65% consciously recycle.
In general, shoppers are willing to pay 4% more for food products that are environmentally conscious. In particular, Millennials and Gen Z put sustainability ahead of brand and price.
- Most Gen Z shoppers are willing to spend 10% more on sustainable products.
- 75% of Gen Z say sustainability is more important than brand.
- 42% of Gen Z and Millennial shoppers say sustainability is more important than price.
Consumers have become more aware of sustainability impacts throughout the food production chain, not just the point at which a packaged product lands in the store. They’ve become more conscious of ingredient sourcing and want to know how and where ingredients are grown and produced.
6. Grocery Retailers are Now Lifestyle Retailers
About half of consumers say that their primary grocery store is helping them be healthier. Grocery stores are now being seen as outlets for health and wellness.
Nearly 50% of shoppers say that the healthiness of food is a purchase driver. As such, almost 60% of consumers are paying more attention to ingredient listings, and 85% look for products with specific functional ingredients. Retailers can leverage these desires by offering more premium, health-conscious, more natural ingredients.
7. Artificial Intelligence Feeds Every Touch Point
Artificial intelligence has moved far beyond supply chain management, dynamic pricing, and predictive analytics. It’s now impacting every area of the grocery store.
Smart shopping carts will make the shopping experience more personal and engaging by providing shoppers with recommendations, deals, and new product announcements personalized to the items they’ve already placed in their carts.
Generative AI searches will allow people to shop by use case rather than by items. For example, rather than shopping separately for balloons, wrapping paper, and paper plates, shoppers will be able to shop for birthday, wedding, or baby events and receive additional product recommendations specific to that need.
AI predictive analytics will help grocery retailers identify optimal shelving and assortment based on a range of external events including weather patterns, social media events, or up-to-the-minute trends.
Summary
Sustainability is no longer a buzzword – it’s a cart staple now. Private labels are no longer hidden gems but wise decisions offering quality without fancy price tags. Contextual commerce is no longer a fad but an essential evolution of omnichannel retail.
Implementing these grocery trends doesn’t happen without careful planning and foresight. You need the right set of consumer data to ensure you will delight your customers with innovations that are meaningful to them. The shopper insights experts at Explorer Research have the deep knowledge and tools to help you understand your shoppers, and help you build a stronger path to purchase. Get in touch with us to explore your opportunities further.
