“As consumers keep a tighter grip on their real and digital wallets, they are also looking differently at the produce section. Following the pandemic and supply chain backlogs, the latest — and significant — marketplace disruption of high inflation means that we’re a long way from what we knew as normalcy.
It’s almost impossible to avoid seeing higher prices, much less hearing about price hikes from headlines and everyday conversations. Mid-summer data from the U.S. Bureau of Labor Statistics (BLS) showed that the Consumer Price Index (CPI) for food at home was up 12.2% over the same time in 2021, the biggest year-over-year surge since April 1979. The CPI for fruits and vegetables edged up 0.7% in June alone, following a 0.6% uptick the previous month.
Other data shows consumers are becoming more discerning about what they buy, pulling back on some purchases and trading down on others. A report released by Numerator this summer affirmed people are buying fewer items — even as their overall spend is up — because of inflation.
At FMI — the Food Industry Association, we’ve been keeping close tabs on the impact of inflation since the numbers started trending upward more than a year ago. One of the biggest pieces of news to come out of The Power of Produce 2022 report released earlier this year was that a solid quarter of shoppers (25%) ranked price as the top factor when deciding to buy fresh produce, followed by appearance, health benefits and ripeness — a marked departure from previous Power of Produce research reports.
People are definitely looking at produce through a value lens. The 2022 Power of Produce found that 82% of shoppers believe fresh produce prices are somewhat or much higher than in the fourth quarter of 2021 and a whopping 92% are making changes.
It’s those changes that growers, distributors and retailers can heed when making business decisions for the short- and perhaps longer-term future, depending on how the red-hot pace of inflation continues throughout 2022 and into 2023. What are some of those notable price-related shifts?
Shoppers are seeking deals: Perhaps not surprisingly, The Power of Produce shows one of the biggest changes consumers are making is going all-in on sales promotions. More than half (54%) of shoppers say they frequently check sales prices at their main grocery store. Technology is improving at the right time here, with shoppers using more apps, websites, social media and texts to check promotions, and with retailers deploying technologies to better forecast their supplies and stock their shelves.
People are definitely looking at produce through a value lens.
Every bit counts: In an effort to get more value out of their purchases, people are trying to avoid wasting the fresh produce they buy. Giving consumers ideas and recipes for using fresh produce, especially foods nearing the best-by date, can help them stretch their dollar and, in turn, engender loyalty to a brand, supplier or store.
Convenience and variety are still in the mix: Just because shoppers are looking for savings and sometimes trading down doesn’t mean they don’t want convenience or variety. According to The Power of Produce, engagement with value-added produce has risen, with dollar sales for those items growing 11.2%, compared to a 2% bump for conventional produce. The report also shows the importance of convenience rises along with the size of a household, and that younger shoppers appreciate shortcuts and ease of use and preparation.
Likewise, new varieties continue to be a growth engine in produce. New types of fruits and vegetables work especially well as impulse buys, which can lift produce department sales: The Power of Produce shows that 96% of people who make grocery lists can be persuaded to buy unplanned fresh produce items during their trip to stores or online. Seasonal promotions and eye-catching displays can enhance those impulse buys.
Finally, it’s important to keep in mind that grocery shopping and at-home consumption are still dominant in today’s inflationary era. Even if people are not spending as much time at home as they did at the peak of the pandemic, shoppers understand that buying produce at the supermarket is still the lowest cost opportunity for them. Accordingly, there are opportunities to maintain and boost retail produce sales when the cost of dining out and buying nonessentials seem more like a luxury.
It’s hard to tell when and where the peak of inflation will be reached, but in the meantime, those in the produce industry can find shoppers where they are on their purchase journey and deliver value in all of its forms”
*This article is excerpted from producebusiness.com website, published on 17th October 2022