Consumers’ cost cutting continues as food prices rise
In its new report, What’s Next on the Road to Recovery, the market researcher said that American consumers have become used to stretching their dollars during the recession, and now that food companies are raising prices, they are likely to continue using similar cost-saving strategies. These include using coupons, stocking up on sale items, buying private label – or store brand – goods, and shopping at discount stores.
Director of product development at NPD and author of the report Dori Hickey said: “During the recession consumers adopted thriftier spending behaviors and as time went on they became comfortable with making concessions and getting by with less… With food prices rising and consumers experienced at getting the most from their food dollars, consumers are going to be increasing these types of behaviors once again.”
Several major companies have announced price rises for selected product lines on the back of higher commodity prices in recent months. And although Americans are starting to return to restaurants as the economy improves, unemployment is still high, meaning that many consumers are still looking for good-value ways to cook at home. This will lead to continued interest in coupons, discounts, buying private label foods, and eating leftovers, according to the market researcher.
President of the food and beverage unit at NPD Mark East said that higher food prices are likely to prolong consumers’ feeling of financial insecurity.
“The post-recession consumer hasn’t yet returned to financially stable ground and are now dealing with rising food and gas prices,” he said. “It’s important for manufacturers and retailers to understand the shifts in consumers’ attitudes and behaviors in light of the economy and rising prices and connect with the consumer both in-home and in-store with a meaningful value proposition.”
As consumers increasingly expect to pay more for groceries and gasoline, NPD found that the majority of consumers are seeking ways to save money. According to the researcher’s Economy Tracker, which monitors consumers’ economic sentiment, nearly three-quarters of consumers (74 percent) strongly agree that coupons and special deals will become more important factors in deciding what they buy in the coming months.
Food deflation from November 2008 to November 2010 helped to bolster supermarket business, but the US Department of Agriculture has predicted that food prices rises will accelerate during 2011, leading to a forecast three to four percent increase in prices over 2010 levels.
