Lately, it seems like we have had a report on food inflation affecting consumer spending daily in The Produce Reporter newsletter. Consumers are getting hit hard, and so is the industry.
But there was one stat I pulled out of the latest fresh produce retail sales report put out by the International Fresh Produce Association that I thought was worth a second look.
In the report, Anne-Marie Roerink of 210 Analytics pointed out:
“Sales specials, while popular, are only slowly gearing up and are still far below pre-pandemic levels. Consumers are taking notice: 54% say fewer of the items they want are on sale and 44% say items are not discounted as much as they used to be.”
Due to supply chain inconsistencies, retailers understandably backed off on promotions during the initial months of the pandemic. Ad pages have had their own version of shrinkflation. But it’s been two and a half years, inflation is at 40-year highs, and consumers are begging for deals.
Retailers need to step up and highlight value whenever possible.
If they don’t, consumers are going to find somewhere else to shop.
Just this week Walmart CEO Doug McMillion bragged that the Bentonville, AR-based retailer is attracting new grocery shoppers.
“The quality, value, and convenience we offer make Walmart a smart choice, and we’re seeing more middle- and higher-income shoppers choose us,” McMillion said during Walmart’s most recent conference call.
Private label growth in food, in particular, doubled in Q2 compared to Q1, the company said.
It’s not just Walmart out there luring customers to the discount side. Grocery Outlet had a strong quarter and just partnered with DoorDash for delivery, and Dollar General is accelerating its produce roll-out with 3,000 stores expected to offer produce by the end of the year.
And, don’t forget, Aldi is leading grocery growth since the pandemic.
Discounters are moving in on mainstream grocers. Are they ready to hold the line?