Grocery shoppers are looking for savings – and grocery sellers appear to be prepared to provide them.
FMI – The Food Industry Association is out with its latest “The Food Retailing Industry Speaks” report, an annual look at how grocery professionals perceive the state of their industry.
This year, grocery prices are top of mind. Dozens of national food retailers, wholesalers and suppliers representing tens of thousands of stores weighed in for the annual survey.
FMI’s recent U.S. Grocery Shopper Trends report showed that “shoppers continue to perceive high price tags at the shelves and spiking prices in individual product categories,” with the vast majority expressing serious concerns about these rising prices.
And the industry is taking notice. The latest survey found that 75% of retailers and 89% of suppliers believe that “economic concerns and/or inflation will lead to changes in consumer shopping behavior,” with most of them believing that tariffs are going to have an impact on pricing.
So if they can’t avoid raising regular prices for everyone, how about lowering some prices for their most cost-sensitive customers?
When asked for predictions for the months ahead, among those made by suppliers were “increased promotion” and “more targeted promos.” Retailers echoed that, predicting “additional investment in base and promotional pricing.”
Altogether, half of all retailers and suppliers participating in the survey agreed with the statement “the industry will sell more on promotions/offer more sales promotions.” Wholesalers were even more certain that deeper promotions are coming, as more than two-thirds of them agreed with that sentiment.
That tracks with what some shoppers report seeing. A separate Bank of America survey found that 21% of shoppers had noticed “the most dramatic uptick in discounts” in grocery stores last month, the highest level since that survey question was first asked back in 2020.
There will always be some shoppers who grumble about higher prices, but pay them anyway. It’s the shoppers who reject those higher prices that industry participants are hoping to tempt with promotions, before losing them as customers altogether. Among the biggest challenges that retailers and suppliers alike cited was the “shift of shopping behavior to discount banners,” as more shoppers avoid higher prices at traditional grocery stores by doing more of their grocery shopping somewhere else.
“While supermarkets remain the most frequently used channel, their lead as the most common primary store has narrowed in recent years,” the FMI report found. 40% of shoppers do the majority of their grocery shopping at traditional grocery stores, with 31% preferring mass merchandisers like Walmart. All totaled, “each month, shoppers engage with more than five different retail banners — a number that has grown over the past decade,” FMI noted.
So the industry is trying to make prices more attractive and shopping more seamless. 86% of retailers are using digital sales circulars, and 74% are still printing paper circulars. But only about a third find them to be “very effective.” Retailers are more bullish about electronic shelf labels, which will allow them to advertise special deals more effectively, with more than a third using them now, and a further 20% expecting to introduce them in the year ahead. And nearly half of all grocery retailers offer some form of scan-and-go technology, compared to just 26% a few years ago.
One technology that does not appear to be growing is self-checkout. FMI found that nearly 60% of all grocery transactions last year took place at regular cashier lanes, a significant jump from 52% the year before. While FMI found that some shoppers simply “prefer to talk to cashiers, and the rest say self-checkout takes longer or is challenging to use,” the increased use of staffed checkout lanes could also be due to recent retailer changes rather than consumer preference. As several retailers in recent years have reduced their reliance on self-checkout, or imposed new limits designed to improve efficiency and prevent theft, some shoppers who might have preferred self-checkout don’t have that option anymore.
Whether they respond by making their stores more shoppable, or more affordable, retailers must confront the fact that “shoppers have a value mindset,” the FMI report concluded. More promotions could help retain deal-seeking customers, while investing in a more efficient and pleasant shopping experience could help satisfy shoppers who are seeking the best overall value for their money.
And if you’re not among the 21% who told Bank of America that they’ve noticed a “dramatic uptick in discounts” in grocery stores lately, then inflation-weary shoppers can only hope that industry expectations of more promotions is one prediction that will soon come true.
Image source: F Delventhal 
