The past three years have been a rollercoaster ride for the grocery retail business.
Back in February 2020, grocery retail was searching for ways to delight consumers and compete with food service and restaurants that were gaining an increasing share of the food wallet. But then COVID-19 changed everything — suddenly grocers were asked to switch to comfort mode and soothe worried shoppers fixated on bulk purchases and finding basic ingredients for meals they didn’t know how to cook.
Fast forward to the fall of 2022 and grocery retailers are in the throes of another consumer shift, says grocery retail consultant John Scott. At the recent Canadian Centre for Food Integrity public trust summit meeting in Toronto, Scott described how consumers are now “turtling” in the face of inflation that many have never experienced.
In this interview with RealAgriculture’s Bernard Tobin, Scott notes how grocery retailers have gone from delighting to comforting to now accommodating the needs of consumers. He also shares how the grocery landscape has changed dramatically since 2020 as retailers like COSTCO have significantly increased market share by accommodating consumers desire to shop less, but buy higher quantities and better quality at discount prices.
As the calendar nears the end 2022, consumer focus is now squarely on inflation and its impact on food and shelter. Scott says this shift has implications for product demand in the grocery store and throughout the entire food value chain. He sees more grocery shoppers substituting no name products for private label brands; package size adjustments from manufacturers to offset price impacts; and reduced demand for meat and protein alternatives, to name just a fraction of the flurry happening at grocery retail. (Story continues after the interview.)
He predicts that the trend to discount retailers will continue to grow, but consumers will hold on to that new-found awareness of how and where their food is produced — they want to know who’s behind it, including the food company and the farmers. “I think one of the great things we’re seeing is consumers still have an interest in long-tern environmental issues and sustainability,” notes Scott.
Scott also acknowledges that it’s costing more money on the farm to produce food at the primary level, from fuel to fertilizer. He believes those costs will have to move through the system and inflation will continue, although at a decreasing rate.