Dive Brief:
- As consumers seek value, grocery shoppers are increasingly switching to lower-priced retailers, a new report from Alvarez & Marsal found.
- Forty-two percent of surveyed shoppers said they plan to switch to less expensive stores this spring compared to 31% who said the same about their shopping habits for last fall.
- “A new trend is emerging – consumers are moving away from trading down on brands and toward trading down on retailers,” the report noted.
Dive Insight:
Among the shoppers who said they are pivoting to lower-priced retailers, over half said they plan to buy the same brands, while the rest said they are also swapping to cheaper brands.
Meanwhile, 35% of consumers — down 14 percentage points from the fall — said they will turn to cheaper brands at their current grocer. Nearly a quarter of respondents said they don’t plan to switch brands or stores, but will instead buy fewer items.
Alvarez & Marsal noted that these findings are indicative of “a meaningful disruption in how consumers are approaching grocery shopping,” stating that customers are “actively seeking value” in the food aisles by trading down on retailers. This shopping behavior shift is coming at a time when lower-priced grocers have significantly improved their value perceptions among consumers, per the report.
Much like private brands have carved out a reputation as quality alternatives to name brands, lower-priced grocers have made inroads with consumers as being acceptable alternatives to traditional grocers. Sixty-eight percent of surveyed consumers agreed that low-price grocers are as clean as traditional grocers, and 63% said customer service at low-price outlets is as helpful as traditional ones.
The longer consumers have positive experiences at these lower-priced rivals, the harder it will be for traditional grocers to win them back, Alvarez & Marsal said.
“Consumers aren't just spending less — they’re spending more deliberately. Value-seeking behavior spans all income levels and demographics,” the report noted.
The consulting group found that grocery is the sole category where consumers plan to spend more. Higher-income households — those making more than $100,000 annually — plan to increase their food and beverage spending by 22%, while lower-income households plan to do so by only 3%.
Private label also continues to be a bright spot for grocery consumers, the report found, noting that while affordability is a main driver, “the appeal goes beyond the price tag,” with more than two-thirds of consumers saying store brands meet their dietary and lifestyle needs or provide better quality than name brands.
The report is based on the firm’s survey of roughly 2,100 U.S. consumers in February.
