Grocery Shoppers Continue to Trade Down Despite Inflation Relief

In times of economic uncertainty and persistent inflation, consumers tend to stretch their budgets to the maximum, especially in essential categories like groceries.

To do so without giving up true essentials, many consumers trade down by buying cheaper brands, shop at discount stores, or purchase a lower volume of some items. PYMNTS Intelligence found that these strategies, which have been broadly adopted by consumers from all income buckets in the past, are expected to persist despite inflation relief.

Data from the most recent edition of the PYMNTS Consumer Inflation series revealed that almost half of grocery shoppers traded down by purchasing from merchants with lower prices, and 35% switched to buying lower-quality items or private-label products.

Alongside the shift to cheaper brands and banners, consumers are becoming more cautious and value-driven when shopping by comparing prices from different retailers.

“Now, we’re seeing consumers shopping in more stores than before,” Pepsico CEO Ramon Laguarta said on an earnings call in July. “They’re looking for better deals. They’re going to channels that have better perceived value. They’re buying more in dollar stores or more in [warehouse] clubs. So, every segment of the consumer is making adjustments.”

If these strategies are not enough, the next step is to reduce spending on less essential products, at least partially. The study “New Reality Check: The Paycheck-to-Paycheck Report – The Nonessential Spending Deep Dive Edition,” a PYMNTS Intelligence and LendingClub collaboration, revealed that three-quarters of all consumers have reduced their purchases of “nice-to-have” items at the grocery store in the last year. This includes categories such as desserts, sodas, snacks and other indulgent or impulse products.

The Kellogg Company said during an earnings call in August that it is seeing changes in how much shoppers buy.

“In terms of consumer behavior, I’d say the shift that we’re starting to see is consumers … closely managing their household inventories, their pantry inventories, zealously guarding against waste,” Kellogg Chairman and CEO Steve Cahillane said at the time. “…And so, we haven’t seen shifts out of our category, really. We haven’t seen meaningful moves into private label or anything like that. … We would expect [these behaviors] to continue moving forward.”

Meanwhile, in an interview with PYMNTS posted in June, Barbara Connors, vice president at 84.51˚, Kroger’s retail data science company, discussed the ways consumers’ grocery shopping patterns remain and will remain affected by inflation.

“Shopper behaviors that have been adopted over the last year and a half during the inflationary environment are going to linger,” Connors said. “As we see inflation cool, we’re not going to see an immediate drop in using coupons, in looking for deals or in looking for value.”