Inflation dominates various group discussions heading into key holiday season

October 30, 2023 

 By Jackie Lewis, VP of Content for CMA | SIMA 

Last quarter our private networking groups focused heavily on inflation’s impact on shopper behavior, and participants were optimistic that some cooling might bode well for 2H23. Unfortunately, higher prices continued to persist in 3Q and conversations were dominated by inflationary impacts by channel and category. Even in groups traditionally focused on other topics like independent insights and analytics and flavors, retail pricing and its impacts came up again and again.  

 The CMA and SIMA strive to stay on top of industry trends and specifically how they impact the category management and shopper insights functions. One of the ways we do this is through our quarterly private networking groups (PNGs) made up of suppliers and retailers to discuss industry pain points and best practices.  

 While the full notes remain available to participants only, we wanted to share some of the key takeaways from meetings held in 3Q (July-September). These are meant to both inform on real-time industry topics and make members and non-members aware of the networking opportunities available through ARC (The Association for Retail and Consumer Professionals). 

Key Takeaways from NEW Independent Insights & Analytics Group

  1. Shoppers remain pressed to get the most out of their dollars, with mass-market channels doing well as consumers trade down. However, units are not improving, and dollars are starting to decline in various categories as well. 
  2. While shoppers are cutting back in some areas, they are still willing to pay for premium brands when they can. One example cited came from a shop-along survey during back-to-school shopping. Parents turned to the dollar channel to buy supplies for their children’s classrooms but splurged on more expensive brands on supplies for their own kids.
  3. Participants shared that higher-end prepared foods have somewhat benefitted despite inflation as restaurant prices continue to increase. 
  4. The group agreed Path to Purchase studies are best undertaken every 2-3 years, given the investment of time and as well as cost. 

Key Takeaways on Private Label  

  1. Consumers are under spending pressure, which means they are trading down in select categories to private label. The bigger challenge, however, is that some are “trading out” completely of categories, and the data isn’t clear on where that spend is going.  
  2. Shoppers are willing to seek out bargains where they can find them, which is leading to some sales moving to different channels, for example, from specialty to club.
  3. Bigger pack sizes fared well during COVID, and subsequently smaller sizes performed better during the recent inflationary period. Participants are unsure where shopper preferences will ultimately ‘net-out’ as potentially the market for middle-range sizes will be eliminated.
  4. As long as inflation remains a factor, members anticipate private label brands will benefit. CPGs will be particularly challenged if retailers begin to decrease prices on their private label items. 

Key Takeaways on Flavors

  1. While peach still remains ‘flavor of the year’ in terms of sales trends across categories, Asian-inspired as well as floral flavors (ie. hibiscus, lavender) seem to be gaining popularity recently. Spicy extensions or items with heavy spice have not fared quite as well, outside of the traditional spices during key holiday times.
  2. Participants are finding success evaluating entire categories as a whole in terms of flavor coverage, to make recommendations on the right mix and focus on complementary items vs. redundancy in flavors.
  3. One emerging flavor trend to watch: the popularity of Hatch chiles, the broad name given to a variety of mild New Mexico chiles. There are red and green Hatch chiles, with the green more likely to be roasted and the red more likely to be dried. 
  4. Flavors are much more difficult to change in bakery, given consumers’ connection to the tastes they’ve grown accustomed to over many years. Participants recognize experimentation with bold, bright colors is a way to innovate in bakery vs. introducing new flavors.