The Bureau of Labor Statistics reported Dec. 11 an uptick in inflation in November of 0.5% for food at home, including increases in four of the six major grocery store food group indexes. Among those suffering spikes was the index for meat, poultry, fish and eggs, which increased 1.7% over the month, led in part by a staggering 8.2% increase in the price of eggs. A decline of 1.1% in the prices for cereals and bakery products and a 0.1% drop in dairy prices offered some relief to cash-strapped consumers, but likely was not enough to reassure them after years of steady increases across categories.
In this episode of FoodNavigator-USA’s Soup-To-Nuts Podcast, Nolan Lowry, who directs consumer research at the retail data science and insights company 84.51°, explains how persistent price increases impacted grocery shoppers in 2024 and how they will continue to influence what consumers buy and where they shop in 2025. He also shares how shoppers are stretching their budgets with a “value mindset” to support their health goals and buy innovative products with nutritional benefits.
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More than a quarter of consumers are uncomfortable with their finances
According to Lowry, the economy and personal finances were a top concern for consumers in 2024 and pushed many to shift how they shop – a trend that he does not see changing in the new year.
“Inflation has been a major disruptor for the past three years and we have seen levels of concern for those being “extremely concerned” ranging from 60% to 70% -- that is a high number,” Lowry said. He added 28% of consumers say they are not comfortable with their personal finances.
In response, he said, consumers continue to practice value seeking behavior, such as looking for sales, deals and coupons or switching brands and retailers to save money.
Specifically, data from 84.51° shows 69% of consumers in November 2024 reported looking for sales, deals and coupons more often, which is up from 64% in January. Likewise, 54% report cutting back on non-essentials in November compared to 52% in January, and 49% report switching to a less expensive brand in November compared to 47% in January.
Shoppers are not applying these behaviors consistently across the store. According to Lowry, some categories are being hit harder. For example, between 44% and 46% of shoppers are willing to switch to less expensive brands in the dairy, cereal, drinks and frozen food category.
Budgeting behavior also is influencing whether shoppers order groceries online or buy them online. But as Lowry explains, there are pros and cons for both channels for value-shoppers. For example, shopping in store may make it easier for consumers to spot sales tags, but shopping online can simplify sticking to a budget.
Consumers balance health and wealth
Even as consumers seek savings, 84.51° research found one place they are willing to spend is on products that support their physical health and emotional wellbeing.
According to Lowry, consumers no longer associate just exercise with their physical health – they also increasingly think about the role their diet plays, which is driving them to buy more better-for-you products with functional ingredients.
Protein remains in demand, but the sources are expanding
Protein remains a top benefit consumers seek to support their health, and while animal-based sources remain the most sought-after, Lowry noted an uptick in consumption of plant-based options.
Lowry notes that consumer interest in tofu at 11% is nowhere near that of red meat at 85% and poultry at 81%, but data from 84.51° found 33% of consumers plan to consume more plant-based milk while 20% plant consume more plant-based frozen meat and 13% want to consume more fresh plant-based meat. When choosing a protein, Lowry reiterates, taste is extremely important to consumers. But he adds price is influential as well with 53% of consumers sighting cost as a reason why the consume less plant-based.
Lowry noted more shoppers are reading labels to evaluate which products will help them meet their health and wellness goals. Again though, this behavior is not applied consistently across categories. Consumers are more likely to look at labels for frozen foods, cereal and shelf stable drinks.
Connect with consumers to know their needs
Given brand- and category-shifting are unlikely to stabilize anytime soon, Lowry suggested retailers and brands can reinforce consumer loyalty by getting to know their consumers better and innovating to meet their needs. He also suggested embracing technology, like responsible AI, could help retailers win over consumers.
A starting place to learn more about consumer needs is 84.51°’s recently published Consumer Digest – Balancing Act: Wallet & Wellness.