Store Brands: Q&A: 84.51°'s Outlook on Private Label, Consumer Trends in 2023
Barbara Connors, vice president of Strategy and Acceleration at 84.51°, reflects on consumer trends of 2022 and how they are likely to shift in the coming year.
2022, inflation was a key factor in consumer decisions. Many Americans shifted towards private label products in attempts to save money at the grocery store.
With the New Year around the corner, Barbara Connors, vice president of Strategy and Acceleration at 84.51°, Kroger's retail insights firm, sat down with Store Brands to discuss how 2023 might be different when it comes to consumer trends and how retailers can plan accordingly.
Connors: This year, we saw inflation become the dominant stressor for consumers, creating new constraints and influencing behavior among shoppers across age and income level. While it should not be surprising, one important learning from this year was just the breadth of levers that shoppers could pull spend their money differently and fulfill needs on tighter budgets.
Throughout the year, we saw numerous examples of ways in which shoppers exercised creativity and savviness to stretch their budget. When meat prices began to rise at the beginning of the year, we saw a variety of responses – from buying different cuts of meat, to trying new recipes that would require less meat, and even trying protein alternatives.
As price increases spread across categories, consumers began looking for deals and coupons more often, cutting out non-essentials and buying certain categories less frequently. It is important to note that while these behaviors were seen a macro level, each consumer has a unique set of constraints, definition of ‘essential,’ and prioritization of category needs.
Connors: Inflation trends influenced the willingness and appetite for shoppers to trade to lower cost brands and private label offerings this year. As of November, half of shoppers we surveyed indicated that they have switched to a lower cost brand more often in response to grocery store price increases. Shelf stable foods and household cleaning are two specific examples of categories which have seen higher demand for and switching toward private label.
As we find ourselves now in holiday mode, it has also been interesting to see the role that brands do – and sometimes do not – play in holiday traditions. When we asked customers what attributes are more important when doing holiday grocery shopping compared to normal shopping, the percent of shoppers who rated “price” was 3-times as high as the percent who rated “brand” as important.
Connors: We survey consumers each month to keep a pulse on attitudes, preferences and motivations. This year, we have consistently asked each month about the level of concern over Inflation, and it has consistently been above 65% since March. Given the persistence and pervasiveness of this concern, I expect the shopping habits that emerged this year to save and stretch dollars to continue into 2023.
The likelihood of private label marketers retaining shoppers they gained this year even as inflation subsides will be influenced by the actions they take. First, sustained purchase intent will be dependent on whether these products deliver the quality and benefits that shoppers want long-term. Second, just as national brand marketers know, you cannot take brand loyalty for granted. It must be nurtured. It will be important for private label brands to deliver ongoing value, communication and loyalty rewards to stay in the consideration set and incentivize continued purchases.
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