65% of shoppers are changing their behavior because of inflation. We have all felt the impact of recent inflation whether at the gas pump or at the grocery store. At Explorer, we wanted to check the pulse of what trade-offs shoppers are making, and what channels they are shopping at more often or less often.
First off inflation is a major concern right now, more so than the environment as shoppers are genuinely concerned about the impact of inflation with 84% very or somewhat concerned. This compares to 66% of respondents that are very or somewhat concerned about the environment. So, the relatively short-term impact of inflation supersedes the longer-term concern about the environment.
The biggest change we see is that 65% of shoppers are changing their shopping behavior. This includes 28% shopping at different stores to get the best deals and 25% switching to a store that offers more coupons and deals. 10% are switching stores to avoid impulse purchases.
By channel we are seeing more shopping at Mass, Dollar, Grocery, and Online channels and decreases for Drug, Natural Fresh Food Stores, and Convenience Channel. Club has remained the same for shoppers. The main drivers of channel shifting are driven by price, convenience, and variety.
Shoppers are aware of pricing with 76% of shoppers knowing the price they are paying for food or packaged goods. This is super important for retailers and manufacturers to be aware of especially when considering adjusting pricing or downsizing.
So, given the big impact of inflation right now, where are shoppers cutting back? Our research shows that 53% of people are cutting back on entertainment (movies, concerts, streaming services), 51% are cutting back on dining out, 44% reducing spending on larger purchases and 29% are reducing spending on groceries. The cutback on grocery spending is significant as prices have already increased around 9% so cutting back means a reduced amount of food in the household. The reduction in grocery spending is fuelled by price increases (64%), products not being available (39%), and fewer sales promotions (26%). So how are consumers cutting back on groceries? 39% of shoppers are cutting out more indulgent items, only purchasing essential items, or switching to less expensive brands.
As you and your team are working to address inflation and help your consumer, we would advise caution with price increases or downsizing moves. Contact our team to find out more about how to develop a strategy during these inflationary times.
