Inflation may be down, but consumers remain singularly focused on price

Grocery Dive · (Industry Dive)

This story is part of a series on key trends that will affect grocers in 2024.

A year ago, the COVID-19 crisis remained top of mind, grocery inflation was soaring and consumers were scrambling to keep up with their supermarket bills. Today, the pandemic’s impact has faded and food costs are no longer galloping ahead — but grocery prices remain an overriding concern for shoppers as they navigate an economic landscape still pockmarked with uncertainty.

Bowed by an ugly mix of high interest rates, rising debt and growing costs for necessities like housing, consumers feel boxed in by their expenses and are in a mood to stretch their money however they can, according to industry analysts. Add in the pressures imposed last year by factors such as the resumption of student loan repayments and reductions in SNAP benefits, and many people have essentially run out of financial breathing space, said Ross Steinman, a professor at Widener University who focuses on consumer psychology.

“People will still spend, but they’re going to do what they can to spend less in any way that’s possible,” said Steinman.

Steinman added that many people are coming to terms with skyrocketing prices for items like insurance that they typically spend little time worrying about until a bill arrives. “That has put a magnifying glass on everything else that they purchase,” Steinman said. “And what do they purchase most frequently? Groceries.”

Michael Snipes, an associate professor of instruction of economics at the University of South Florida’s Sarasota-Manatee campus, said the conditions that are pushing consumers to watch their spending have been decades in the making.

“It’s really coming to a head because it’s now gotten to the point where people can’t afford — or really have to make tough decisions on — necessities,” Snipes said, adding that as consumers have faced sharply elevated costs for essential goods for an extended period, they have become acutely aware that their buying power has diminished.

Retailers have accelerated their efforts to show that they recognize that people are facing financial stress and looking for relief at the grocery store. For example, grocers have decked out their stores with signage emphasizing their focus on value and are using their rewards programs to offer people personalized savings.

Southeastern Grocers, which runs the Winn-Dixie, Harveys Supermarket and Fresco y Más banners, recently announced a public relations campaign emphasizing that it wants to help people “achieve their savings resolutions” despite the headwinds facing the economy. E-grocer Hungryroot, meanwhile, is promising to refund the difference if shoppers notice an item in its “Best Price” program for less elsewhere.