With shoppers continuing to tighten their grocery budgets, retailers and manufacturers have an opportunity to win customers now and build loyalty for the future.
Nearly 80% of shoppers are considering price before making a purchase most or all of the time, according to a new study from Advantage Solutions’ Branded Services | SMARTeam that surveyed more than 1,400 shoppers about the impact of grocery prices on their shopping behavior. More than half of shoppers consider price per unit/ounce/count.
With six in 10 Americans describing themselves as pressured by personal finances, this much is clear — finding the best prices on grocery items is the top priority when shopping for food and other household items.
“Some shoppers look for sales, while others rely on retailer low prices,” says Katie Rigby, senior director of shopper insights for SMARTeam. “Sales motivate financially comfortable shoppers to stock up regardless of how much they already have on-hand, while 75% of those who are struggling say the retailer with the lowest prices matters most. Manufacturers need to understand what’s motivating the buyer to ensure the deal has the best ROI.”
While 40% of shoppers say they are comfortable with their personal finances, 45% say they are “managing, but money is tight,” while 15% are struggling and can’t keep up with current expenses. These are the shoppers most likely to always consider the price of an item.
“The 40% of shoppers who say they’re comfortable with their finances are more likely to have excess food in their pantries,” Rigby says.
With two-thirds of consumers stretching food budgets, with households cooking at home more and dining out less, retailer and brand strategies are critical to driving trips and basket size.
For example, “to help stretch their pocketbooks, shoppers are eating leftovers more often,” Rigby says. “Recipe ideas for leftovers should be part of manufacturers’ social media strategy.”
Here are key findings of the report for CPG brands and grocery retailers to consider when determining price.
- Quality of the product remains the top consideration for food purchases with 44% of shoppers, while value ranks second (35%). When it comes to non-food items, value is the top consideration for 37% of shoppers while quality ranks second (28%).
- Almost half of shoppers have stocked up beyond their usual purchases, choosing to buy extra when prices are attractive, particularly household products and health and beauty care. Nearly half of those surveyed say that when they have more product on hand than usual, that excess is typically prompted by good prices or sales.
- Total price point is considered more important by shoppers than discounts, quantity deals and price per unit/count/ounce. But price promotions still have impact — temporary price reductions (sale prices), coupons and deals on multiples (e.g., two-for-one) are all likely to increase the probability of a purchase.
- Convenience remains a strong driver for shoppers. “Whether it’s busy or bored cooks, demand continues for ready-to-eat and heat-and-eat meal solutions as shoppers shift from dining out to easy-meals at-home,” Rigby notes.
- Size matters. When a product increases in size but not price, 85% of shoppers expect they would buy the product. But manufacturers should call attention to size increases when they occur or risk losing potential sales. “Only 39% of shoppers say they’d absolutely notice if the product increased in size but not price,” Rigby says.
“Manufacturers have an opportunity to attract shoppers by promoting on-package value,” she adds, “but shoppers must ‘see’ the deal. Two in 10 said they’d likely not notice if the package increased in size without a price increase.” - Few shoppers care about specific discounts, but those who do can be valuable as a group (e.g., SNAP shoppers spend an average of 20% more on groceries each month than non-SNAP shoppers).
- More than half of shoppers (54%) choose the grocery channel as their primary source of groceries. These shoppers are doing better than their peers financially. They are least likely to consider price per unit/count/ounce. Coupons may influence their purchase decisions.
Download the Advantage pricing study here.
