Looking into Top 5 Grocery Trends Back Half of 2024
As we step into the back half of 2024, the grocery landscape continues to evolve. Some of the predictions of this year have been spot on. What's clear is shoppers' needs and preferences are continuing shifting, shaped by changing economic realities, advancements in technology, and the continued emphasis on healthy and sustainability. Here's the top 5 trends that will continue to shape and define the grocery experience.
Inflation is still driving up prices, and it remains a challenge for consumers. In 2023, average unit prices rose by 4-8%, and in the first half of 2024, they increased by a more modest 1.7%. While this shows some improvement, prices over the past four years have climbed by more than 34%. This has had a significant impact on shoppers, who continue to adjust their spending to stretch their dollars and prioritize essentials. With wage growth still lagging behind inflation, many are making tough choices in the grocery aisle - focusing on must-haves for their families while leaving some non-essentials behind. As part of the top trends below, many brands need to continue to reevaluate their pricing and promoting strategies to meet consumer needs.
1. Private Label Growth Continues, But Slowing Down
Retailers continue to improve the quality and market share of their own brands. Additionally, they continue to brand them to make them feel like national brands, but targeting consumers that are seeking lower prices which has been outpacing the growth of national brands over the past year. Based on insights from NielsenIQ study, private label sales reached 19.5% of the dollar share which is up 3% from a year ago, however, the growth is slowing.
What does this mean for CPG brands: There's opportunity for CPG brands to regain some space on shelf in parts of the grocery store that a retailer own brands may not be performing as well. Ask yourself, how are you building your brand loyalty, optimizing your pricing and promotion strategies, and/or strategically using the use of loyalty programs and personalized discounts? Inflation and price sensitivity is still on the minds of shoppers and they're seeking value, but they don't want to sacrifice that for quality.
2. Sustainability is Important to Consumers
Sustainability matters to consumers where nearly 95% say they are trying to take some action to live sustainably based on NielsenIQ recent insights. However nearly 26% of shoppers find it difficult to find sustainable products on the shelf or online. They're wanting transparency from retailers and brands on their sustainability efforts, ethical sourcing, and package reductions.
What can you do as a brand or retailer: Make sure that shoppers can discover and purchase plant-friendly products at their key retailers. Brands can work with retailers to make sure that the sustainability attributes are clear, from their digital sites and digital product landing pages as well as providing key locations in the store to easily access them (i.e., signage, tags, etc.). Brands need to keep their packaging simple and clear on their sustainability efforts. This includes sustainable packaging efforts and certifications like B-Corp or Fair trade key symbols on your packaging in prominent locations are important. Additionally, consider joint marketing campaigns that showcase your brand's and retailer's eco friendly initiatives.
3. Value Retailers Share Increase and Convenience is Priority
Value retailers continue to see an increase in shoppers and have now reached 43.1% of dollar share which is 4% more than a year ago with their food dollar share reaching 36.1%, up 5% from a year ago. This can be the biggest reason why we seen an overall drop in unit sales. Convenience is much more of a priority than experiences for shoppers. Based on a Gartner's survey, more than half (57%) plan to use one or more value-added services in the back half of the year including same-day delivery, expedited shipping, curbside pickup or buy-online, etc.
How should CPG brands respond: As shoppers are shifting their preferences, more premium brands will need to convey their true value in a way that their shoppers care about. If you can convey a message that can value their time, money, health, love and or freedom may help show the worth of the extra expense. Understanding your shoppers and what other factors they care about beyond price will help win them over. In addition to your value statement, being available at all paths to purchase will be critical. Brands need to make sure they are promoting their availability across all value-added services retailers offer and marketing to shoppers as they add their items to their online cart will be key.
4. Omni-Channel Sales Have Grown 5X More than In-store Sales
The U.S. retail landscape continues to shift quickly, where based on a NielsenIQ study, nearly 86% of CPG dollar sales come from omni-channel shoppers. In addition, CPG online sales have increased over 10% from last year compared to only a 2% growth in in-store sales - that's a 5X faster than in-store sales! The grocery channel continues to be lagging behind in overall online sales share which is a great opportunity for growth.
How can CPG brands leverage this insight: Successfully growing your brand in this new omni-channel landscape will require clear focus and access to accurate, actionable data. Being able to utilize retail sales, market trends, and consumer behavior insights will be essential in ensuring your brand is meeting consumers' needs and to be ready to pivot and react to social-driven consumer trends.
5. Nearly a 1/3 of Shoppers Will Begin Holiday Shopping Before November
Due to brands promoting more before the holiday season, shoppers are following them to get the right price and are choosing to shop more in the months between July and October. In addition to starting early on their holiday shopping, most shoppers do intend to maintain their holiday spending while nearly 20% will pull back based on Gartner's recent survey. This is a direct effect of high inflation and supply issues which has kept holiday shoppers on edge.
How should CPG brands react: As shoppers adjust their habits - many beginning their holiday shopping before November and maintaining last year's spending levels - there's still plenty of opportunity to tweak your marketing strategy. Thanksgiving and Christmas are key sales and unit drivers, but don't overlook the multiple touch points throughout the season, from Halloween gatherings to pre-Christmas get-to-togethers. Shoppers are looking for personalized offers, and this is the perfect time to introduce targeted loyalty programs that engage them during this smaller yet impactful moments.
This year has been shaping to be a dynamic year for grocery retail, with shoppers driving change through their evolving preferences and needs. For retailers and brands, staying ahead of these trends will be key to building lasting shopper relationships and thriving in an ever-competitive market.
Interested in learning how these trends can shape your strategy for 2024 and beyond? Reach out to us for a personalized consultation on data-driven insights that will help you stay ahead of the curve. We want to transform your data into powerful brand stories.
Schedule a Consultation - Let's discuss your unique business challenges and how Lauer Insights can help you unlock growth.
Request a Proposal - Reach out to us by our contact us page and share with us your project details. Let us create a customized proposal to address your specific needs.
