When it comes to grocery shopping, how much of a price increase are consumers willing to take?
According to an Insider Intelligence survey from April, 41 percent of U.S. adults are cutting back on name brand items at the grocery story due to inflation, while 37 percent of respondents said they are cutting back on meat and seafood.
With supply chain issues and increased cost in labor and raw materials, some companies have chosen to forward these costs on to the consumer in the form of increased prices, smaller product sizes or a combination of both, says an Insider Intelligence article.
For example, Tyson Foods Inc says it has raised prices to offset the costs of labor and feed yet the company was able to raise its full-year sales outlook after the boost in revenue.
Additionally, some companies have taken the opportunity to raise prices before people become more sensitive to price changes at the store in the event of a recession.
Could national brand companies, especially meat companies, outprice themselves and lose market share in the coming months? How might this come back to affect the producers?
Insider Intelligence reports 89.7 percent of U.S. adult respondents initially decided to switch from a national brand to a private label brand for the reason of ‘better value’ or quality for price. Meat and poultry products accounted for 13.1 percent of products that consumers switched from national brands to private label brands.
For private label brands or direct-to-consumer companies, this shift in consumer buying creates an opportunity to draw in new customers looking for a quality product at reasonable prices.
The large retailer, Walmart, has already started it’s shift towards using a private-label brand, McClaren Farms, to sell Angus beef. This comes in addition to Walmart’s ‘Prime Pursuits’ and ‘44 Farms’ beef programs.
During the pandemic, the awareness of market disruption became all too familiar to grocery store shoppers. With bare shelves, items with buying limits and increased prices, consumers were forced to question and adjust buying habits.
Will price-hiking companies eventually need to realign with the private-label market?
Considering these trends, it’s possible that consumers value quality, availability and affordability over brand recognition.
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