Four Trends Impacting Grocery Sales in 2022
Within an ever-changing retail landscape, it’s important to understand the macro trends impacting shoppers, suppliers, and retailers. We’ve included a brief overview of four trends we’ve observed affecting the produce industry and retail sales this year.
1: Inflation
Inflation rates are constantly changing and impacting shoppers, suppliers, and retailers alike. Similarly, gas prices are currently extremely high, increasing the cost of transportation. Whether you eat at home or at restaurants, food prices are going up.
The produce industry is no exception and has been impacted by these economic and fiscal changes. We’ve seen this as produce prices have increased an average of 8%.
2: Shopping Trips
With fewer dollars in their wallets, combined with lingering Covid apprehension the number of consumer’s grocery shopping trips has declined. If there is one thing retailers want, it is more frequent shopping trips where their customers can shop and buy. More trips equal greater sales.
With Covid related government payments ending, coupled with the high rate of inflation, the most budget-conscious among us are out of funds buying just the most basic items. Not even discount retailers can entice them to purchase more grocery or ancillary items.
3: Promotions
Promotions are often a key driver of sales and a means to attract current and new shoppers to the store. With Inflation being high, many retailers are attempting to “hold the line” on raising prices on everyday items. So, with margins already reduced, there is less of an incentive to reduce prices further through promotional activities.
Retailers, therefore, are looking for suppliers to fund promotional campaigns for their products. Suppliers often do this through coupons and discounts (digital, online, loyalty program, etc.).
4: Supplier Coupons and Discounts (Digital or Otherwise)
With suppliers funding the promotion you may think, “Terrific, everybody wins.” However, that is not necessarily the case. When suppliers fund a promotion, they are typically looking to convert shoppers from a competitor brand to their own brand. This is great for the supplier as they reap additional sales, but for the retailer it is simply shifting sales from one brand to another. These promotions infrequently result in bringing new customers to the store and typically do not result in additional consumer trips to the store. Finally, because these promotions shift sales to another brand, they may add little income to the retailer’s bottom line.
Takeaway Message
Our best advice is to look at developing strategies and programs for the long term, after inflation has subsided. In the meantime, build promotions that provide incentives for customer loyalty. Consider taking a short-term hit on your margins in return for greater shopper involvement and brand allegiance. Let’s all work to find promotions and programs that increase the number of trips shoppers take to the store.
If you wish you knew more about your shoppers and purchasing behavior, contact us and we’ll get in touch!