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Inflation influencing consumers' purchasing behaviour: Study

Consumers are looking for deals, making promotional tactics key.
Women shopping with mask and grocery bag

More than three quarters (76%) of Canadians have changed their shopping choices due to increasing grocery prices and many are seeking discount alternatives, finds a study conducted by Caddle.

“There are pretty incredible pressures on the Canadian consumer that we see in our data,” said Caddle CEO Ransom Hawley, who discussed the study’s findings during a recent Caddle webinar on shifts in grocery shopping behaviour in today’s high inflation climate.

The online representative study of 2,830 Canadian respondents was conducted by Caddle in April.

Among the 76% of Canadians who have changed their shopping choices, 81% will be looking for sales or deals more often, 52% are switching to lower cost brands, 47% are switching to store brand or private label and 45% are switching to lower cost retailers.

Hawley said the number of Canadians who intended to switch to lower cost grocers is “massive” from a retailer and brand perspective. “That means differences in shopping behaviour, potentially marketing and value promotional tactics.”

Though consumers are becoming thriftier, it would be a mistake for marketers to assume shoppers will be seeking the lowest price for all items, said Ryan Harris, principal at IRI Canada. Instead, since people are making sacrifices on some items, they will reward themselves on others.

“The idea is maybe I’ll buy private label on certain products I might have to bite the bullet on, but I’m going to buy the super premium bottle of wine because that’s how I’m going to … reward myself for making these perceived sacrifices,” Harris said. “People start to rationalize their choices.”

He added that while consumers are increasingly looking for deals, it will be challenging for grocers and suppliers to provide them given that there are already many categories that are sold on promotion. Instead, we will start to see more creative offers where grocers and suppliers can add value in different ways – whether it’s through loyalty points or cross promotions.

The study also found 76% of Canadians have experienced out-of-stocks in the past three months. When products are out-of-stock, 60% of sales end up being lost, with cereal and produce being the most affected. In addition, 65% of consumers have changed shopping habits in the past three months due to out-of-stocks.

The industry is facing “monumental challenges” with out-of-stocks, Harris said. To confront the challenge, some manufacturers are eliminating products that don’t yield strong returns, eliminating promotions because they can not meet the demand or developing right size packaging.

Prior to the pandemic, “we lived in a world where we had excessive supply and always became accustomed as consumers to getting whatever we wanted,” Harris said. “Not having that is going to change a lot of purchase behaviour.”

Originally published at Canadian Grocery

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