Retailers to reduce what is on the shelf to better meet snacking trends

Despite inflationary pressures, consumers are not cutting back on snack consumption as much as other food and beverage purchases.

That is the finding in new research put out by Nielsen Consumer LLC in their recent The Future or Retail NielsenIQ report.

According to the study of U.S. consumers snacking and buying habits, consumer’s continuing indulgence of snacks may be driven by them seeing 'snacks as meals' and snacks as an affordable indulgence in this time of increasing food and grocery prices.

What is interesting in the study is how consumers are indulging their snack cravings. The NielsenIQ study finds that more consumers are going online to find and order their snack indulgences, giving them a wider range of options, types of snacks and flavours to discover and try. While dropping into a retail and convenience stores continues to be the main gateway to getting snacks, with the number of convenience stores growing some 8% amongst consumer between 2005 and 2023 (140,655 to 152,396), consumers are also turning to dollar stores, super centres and warehouse clubs to get their snacks, seen in the growing number of such non-convenience store locations in the U.S. Dollar stores showed the greatest growth with 38,435 locations in 2023, up from 18,579 in 2005, followed by supercentres (2,462 in 2005 to 4,419 in 2023) and then warehouse clubs (1.067 in 2005 to 1,428 in 2023).

However, with increasing costs and greater competitive pressures in the food market today, retailers across the board are looking to simply their offerings. Over the coming years, there will be fewer items on shelves as retailers look to find snacks that meet to a greater degree consumer habits and purchasing trends.

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The NielsenIQ reports finds 40% of retailers plan to reduce their SKUs over the next 12 months, with 19% saying they are looking to introduce more private brands onto shelves and 13% looking to reduce inventory and thereby reduce costs.

While traditional flyers and promotions continue to be a part of the retail landscape, retailers are increasingly aware of the importance of digital communications. More consumers are using digital devices to compare prices, shop across multiple retailers online and using digital flyers and savings apps to find the best price for snacks. The challenge will be over the coming years finding the right mix of snack offerings and pricing them competitively while ensuring those prices are not too high as to cause consumers in retail operations to go somewhere else looking for a better price.

“Shoppers are using mobile devices as an integral part of the in-store shopping trip, with significant shifts occurring in weekly ad viewing and barcode scanning indicating focus on deals, low friction checkout and food label details,” the study’s authors write. “Shoppers are embracing technology as an aid to their in-store experiences. The challenge for retailers will be understanding price thresholds for brands that would cause a shopper to leave their stores for better pricing elsewhere.”