Amid ongoing inflation and economic challenges, grocery shoppers are recalibrating their budgeting behaviors to make ends meet.
Katie Kobus, vice president of marketing at Save A Lot, a grocery banner wholesaler with 760 stores across 32 states, spoke with PYMNTS to provide an in-depth look at how their customers are navigating financial pressures and the strategies the company employs to meet these evolving needs.
“There’s been a huge shift in the grocery business, I would say, from how and when customers shop to how many stores they’re actually visiting to ultimately, what they’re putting in their cart,” Kobus said. “A lot of shoppers overall, but particularly the Save A Lot shopper — the value shopper that we cater to — are working with reduced budgets as a result of inflation, of having fewer available SNAP dollars, other factors.”
These shoppers are not only seeking affordable grocery options but are also adjusting their shopping frequency and cross-shopping more extensively to find the best deals.
Indeed, PYMNTS Intelligence research finds that 44% of consumers have switched to cheaper merchants due to the increases in grocery prices. Plus, that share rises to 48% for those who make less than $50,000 annually and 53% for those that live paycheck to paycheck with issues paying their bills.
Moreover, the same study found that 58% of consumers have cut down on purchasing nonessential groceries.
“We’ve seen shoppers prioritize to those everyday staples that are going to help them build their meals, and not so much of the indulgent splurge type of items,” Kobus observed.
The practice of cross-shopping — comparing prices across different stores — has become a critical behavior among Save A Lot’s customers. Kobus explained that shoppers are more diligent in hunting for deals, leveraging both manufacturer- and store-issued coupons. This trend underscores a broader industry shift toward a heightened demand for value.
“Customers are shopping circulars to find the best deals, and … we’ve seen an uptick in the use of coupons,” Kobus noted.
In fact, shoppers who use coupons tend to be more satisfied with their shopping experience, PYMNTS Intelligence data reveal, with coupon users reporting 33% higher satisfaction with their buying experience.
Plus, consumers are also looking for other ways to offset their grocery spending. “Leveraging Item-Level Receipt Data: How Merchants Engaged Holiday Shoppers With Card-Linked Offers,” a PYMNTS Intelligence and Banyan collaboration, found that 60% of all cardholders are very or extremely likely to use product-specific card-linked offers for buying groceries
Save A Lot has responded by introducing initiatives like their price drop program, which offers monthly discounts on key items, and seasonal coupon programs that provide digital access to savings during major food holidays.
Indeed, the PYMNTS Intelligence study “Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers,” found that 44% of grocery shoppers are deal chasers, making purchases wherever they will get the best price. Plus, more than two-thirds of grocery shoppers stated that prices and discounts impacted their choice of where to make their most recent purchase.
Moreover, supplemental research from PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” created in collaboration with Adobe, found that among grocery shoppers, the most common issue consumers faced was that their grocer had higher prices than other merchants.
Kobus has seen increasing demand for high-quality private label products. Save A Lot has adapted by streamlining its product assortment to focus on essential items that value shoppers need daily.
To that point, the same PYMNTS Intelligence study that showed trade-down to less expensive merchants also revealed that 34% of shoppers have switched to cheaper grocery products to save money amid inflation. That figure climbs to 42% among those who live paycheck to paycheck with issues paying bills.
Save A Lot’s view is that streamlining the assortment for convenience provides a better shopping experience than offering as many choices as possible.
“When you walk into a Save A Lot, you won’t see 17 different brands and types of ketchup. We focus on a core assortment to make shopping as efficient as possible,” Kobus said.
Understanding customer behavior is paramount for Save A Lot, and the company is investing in tools and technology to gain deeper insights. While they do not currently have a loyalty program, they are exploring various digital engagement methods to connect with and understand their shoppers better. This includes tracking how often customers visit stores, what they purchase and how they interact with competitors.
There is a high demand for targeted communications. A PYMNTS Intelligence study reveals that 83% of consumers surveyed are interested in receiving customized discounts and promotion offers.
Kobus highlighted the importance of this data-driven approach: “We’re always looking at tools and technology to better understand our shoppers. It’s about providing value when and where they need it.”
Looking ahead, Save A Lot anticipates continued evolution in customer behavior, driven by economic conditions and the ongoing quest for value. Challenges remain. The company is continually testing and learning to see what resonates with their shoppers, adjusting their strategies accordingly.
And while visits and nonessential spending may be on the decline, basket sizes and omnichannel engagement continue to rise.
“When [shoppers] do come in, they tend to buy those larger baskets and spend the funds that they have available,” Kobus said. “They’re also engaging more in the digital space. That’s continuing to evolve. … We’ve definitely noticed a change in behavior there.”
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