3-12-2025 4:54am

Survey Says Store

Budget concerns are changing shoppers’ retail behavior

Surveys of more than 5,300 consumers between May 2023 and August 2024 revealed 75% are shopping differently in 2025, 46% expect to purchase more store brands and 41% will use more coupons.

The first annual Grocery Shopper Perspectives report from AlixPartners, a New York-based financial advisory and consulting firm, said in the past year, 75% of shoppers “have made changes to how they buy due to financial concerns,” and that they expect to continue to do so in the months ahead.

Consumers also expect to buy less this year from premium categories, such as organic items, deli and prepared foods and bakery products, and more canned goods and frozen products, the report said.

It remains to be seen whether those surveyed will shop in the ways they intend to this year, but budget concerns were a common thread in survey results, said Matt Hamory, a retail expert with AlixPartners and one of the report authors.

“There’s some economic apprehension in the public, and that comes through,” he told Food Business News. “There are other factors, but I think that’s the key factor.”

Fewer than one-quarter of survey respondents said they were confident about their financial situation, and 62% said they were concerned or very concerned about it, the report said. Budget concerns have shown up in other recent research on the impact of shifting shopper behavior on the retail grocery market.

The concerns are prompting more shoppers to patronize mass merchandisers such as Walmart and discounters such as Aldi where they can find lower prices, the report said. Also, 35% of survey respondents expect to go to different stores to find the brands or private labels they want, 38% expect to buy fewer items overall on their shopping trips and 41% plan to take advantage of sales to stock up.

Hamory said the pandemic forced people to buy differently by ordering online and having food delivered, bypassing the retail grocer. Consumers today also patronize one store for certain products and make different choices about others.

“You say I can go to one (store) and get a basket but now may say I can get my fresh from this retailer and my ambient shelf-stable from this other one,” he said. “They don’t necessarily have to go to all of these. They can just go to one and maybe click for the others.”

As a result, Hamory said middle-market traditional grocers in some parts of the country are losing business.

“Share has dropped, and I think we’re going to continue to see that for the next 18 to 24 months,” he said. “We could see some bankruptcies.”

One of the challenges for grocers is to maintain a balance of brands, quality and price to keep shoppers coming back when they have so many other options.

“If you only have the same brands everybody else has, you’re going to have to win on price,” Hamory said. “You need a fresh proposition that’s both high quality and well-priced. If you do both of those, you’ll win share over everybody else."

To succeed in the current environment, consumer packaged goods (CPG) companies need to partner with retailers, but not all retail partners are created equal, he said. Big manufacturers need to assess the retailers that are going to grow and also consider some smaller players to figure out where to do business and how much to innovate.

“Innovation for a long time for manufacturers has been about flavors,” Hamory said. “Why have one when I can have 20? You can’t go on and on. Shoppers actually don’t like it because it makes it harder to shop.”

He suggested CPG companies get rid of duplicative products that don’t create consumer demand that flows to the retailer.

“I would advise companies to stop trying to have the sales team keep retailing that stuff,” he said. “Innovate your pipeline and give new things to the retailer. Don’t focus on proliferating the small stuff.”

Marketing CPG products through retailers is a wise move, he said, including telling them why an item is healthy and better for you. Retail media networks, apps, in-store promotions and driving trial with new products are other ways he mentioned to accomplish this.

Closer collaborations between CPG companies and retailers can be a win-win situation for both, Hamory said.

“That’s difficult, though, for the CPGs because, in the last 30 years, they’ve been used to working with any retailer they can, but with the changing market, they’re going to have to start picking winners and placing bets on partners where they can mutually grow together,” he said.