As shoppers spend more for less on groceries, particularly center store, brands face growing pressure to prove why they deserve a place in an increasingly selective basket, according to a recent Numerator report.
Center-store spend makes up more than half of consumers’ grocery wallet, representing roughly $685 billion in annual US purchases, according to Numerator.
While consumers are still spending on larger grocery budgets, they are taking home fewer products. Since 2020, annual center-store spend per household increased 42% while unit sales per household are down 1.2%, per Numerator.
Competition beyond the grocery store is intensifying, too.
CPG food brands are no longer competing with others on shelf, they’re also competing against takeout, quick service restaurants and prepared foods with Numerator reporting that restaurant food spending has gained share since 2020.
The question for brands is how to earn a “clear, repeatable role” in consumers’ increasingly selective baskets, per Numerator.
Value means more than low prices
As consumers plan to spend more on groceries this holiday season, brands and retailers should deliver on outcomes rather than price alone, according to experts. At the same time, four in 10 consumers, including higher income households, are shopping with value in mind. Consumers are willing to justify higher prices for benefits like convenience, quality or health benefits – including premium and fresh offerings, according to Circana
Delivering more value can boost repeat purchases, and increase retail sales for brands. In snacks, for example, brands that offer more perceived value – like taste, availability, flavors, convenience, quality and packaging – compared to brands that offered less value for the price experienced higher retail sales growth, per Deloitte.
Affordability concerns put trust in the spotlight
Food manufacturers and retailers may also face more pressure to demonstrate value and strengthen consumer trust from a policy lens.
Sector-wide affordability, including food, is one of the main areas congressional Democrats are addressing after the Nov. 3 midterm primary election. One expert notes that companies that stand out as trustworthy will demonstrate fair pricing, eliminating shrinkflation and improve transparent communication about increased prices and product changes.
