The impact of inflation, which in June increased by 5.4%, the highest rate in the past 13 years, is causing substantial changes in consumers’ purchasing decisions. According to a new study prepared by Numerator, more than 90% of shoppers plan to change their behavior to cope with rising prices for food, services, and other goods.
The market research-oriented data and technology company released a study to understand the impact of inflation on recent and future shopping behavior, specifically which groups are likely to adjust behavior and where spending reductions are likely to occur.
Eric Belcher, CEO of Numerator, recommended that supermarket owners keep an eye on shopper behavior to take the right actions in their stores. “Forward-thinking brands and retailers move at the speed of consumers, so reaction time is critical.”
According to Numerator, the top three strategies grocery retailers should implement to deal with an inflationary environment are:
- Switch to lower-priced brands.
- Seek promotions and discounts.
- Cut discretionary spending.
With these strategies, they will be able to better react to the behaviors consumers are taking, the survey revealed:
- 49% of consumers plan to switch to lower-priced brands with slight inflation, 60% plan to switch with significant inflation.
- 45% will seek out additional discounts and promotions with slight inflation, 50% with significant inflation.
- 36% plan to cut discretionary spend with slight inflation, 49% with significant inflation.
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The sentiment survey of 600 consumers was conducted in June/July, highlighting that more than half of consumers have already changed their shopping behaviors due to the current inflationary environment.
Eighty-three percent of respondents claimed to have experienced price increases on their commonly purchased groceries or household essentials they usually buy in June and July. Also, 66% expect prices of groceries and household staples to further increase in the next six months.
Over half (54%) of consumers said they are moderately or significantly concerned about future price increases. According to the survey, low purchasing power consumers are almost twice as likely to say they were extremely concerned than consumers with high purchasing power (39% vs. 23%).
Consumer Response to Inflation
- Over half of consumers (55%) said they had changed their shopping behavior due to price increases in the past month.
- Over 90% of consumers plan to change shopping behaviors with price increases (92% plan to change for slight price increases; 95% with significant price increases.)
- Cutting back on discretionary spending sees the most significant jump (36% to 49%) when consumers plan for slight versus significant inflation.
- Inflation management strategies vary based on consumer purchasing power.
- Low purchasing power consumers are most likely to switch to lower-priced brands but less likely to switch to store brands or cut back on discretionary spending.
- Medium purchasing power consumers are the least likely to change behaviors overall but the most likely to switch to lower-priced retailers.
- High purchasing power consumers are the least likely to switch to lower-priced brands.
About how consumers plan to control their spending, the Numerator survey found that 74% plan to reduce their spending at bars and restaurants if inflation rises.
Meanwhile, purchasing power consumers are more likely to reduce spend on Apparel than medium and lower purchasing power consumers. And low purchasing power consumers are significantly more likely to cut from travel and electronics budgets and other non-essential spending.
Headquartered in Chicago, Numerator has more than 2,400 employees worldwide. The company combines proprietary data with advanced technology to create unique insights for the market research industry.