By Sally Lyons Wyatt
Global EVP & Chief Advisor, Consumer Goods & Foodservice Insights

Consumers have grappled with inflation before, but what they’re facing in 2024 just feels different. Food prices are 30% higher today than they were just five years ago. While the U.S. economy has grown in that same period, student loan and credit card debt follows millions of Americans, with credit card debt climbing to $1.13 trillion in the last couple of years. Compounding matters, the pace of cost increases across foodservice, retail food and beverage, general merchandise, and nonedible is outstripping wage growth. 

According to the Circana Volume Vortex Shopper Survey:

  • 86% of high-income families have changed how they buy and use everyday products to save money.
  • 45% of middle-income singles and couples have needed help from family members to meet expenses.

Without question, consumers are struggling, and they’re dealing with these competing cost pressures in creative ways.

Do-it-yourself purchases

To avoid higher preventable costs down the road, consumers are increasingly asking themselves: What can I do myself? This do-it-yourself (DIY) attitude can be seen in everything from health and beauty purchases to auto parts. Consumers are spending more on over-the-counter (OTC) health care purchases, prompted by their desire to stay healthy on their own and avoid needing to see a doctor. A similar mindset governs how consumers think about their vehicles. The inflated costs of new and used cars have led to positivity in auto parts as consumers pursue self-maintenance strategies to keep their cars running and looking as well as possible for as long as possible. As consumers return to their offices and find themselves in Zoom meetings, they’re still wielding their spending power on personal care items and prestige beauty, which continues to buck trends. But, instead of paying higher salon prices, consumers are doing their nails and hair at home more frequently.

Where consumers are spending now
While consumers are constantly trading up and down in response to inflation, we’re seeing them do a lot more of it now — and not just around product choice. They’re also trading up and down in retail channels. The value consumers can find in retail is greater than what they see in foodservice, which is good news for CPG brands, especially in mass retailers, convenience and dollar store channels, where consumers are gravitating in response to inflation. While convenience isn’t necessarily the value channel, it’s convenient, which is a value to many consumers. 

Private brands rise to the occasion
Consumers are leaning into private brands in most categories, according to Circana data. We found private label gained share from name brands, increasing from 24.7% of total unit sales in 2022 to 25.5% in 2023. In general food, for example, private brands have gained 1.2% of unit sales and nearly a full point in unit share. Shelf-stable beverages show a similar story, with private brand units up 1.2% with a unit share gain of 0.7%. At the same time, however, super premium brands are growing. This tells us there’s an interesting bifurcation going on where consumers are trading down or foregoing a purchase in one area but are spending more for premium products that elevate everyday or special occasions.

Three strategies to help consumers stretch their dollar

Following three years of declines, we began to see 1% volume growth in CPG, which is great news in terms of recovery — but consumers have yet to experience the same. To help consumers who are still feeling squeezed, retailers and CPG brands should:

  1. Optimize promotions. Consumers don’t feel like they’re getting enough bang from their grocery buck. Retailers really need to zero in on the types of promotions and displays that have the best return on investment.
  2. Target assortment for their shopper base. Store managers know their shoppers and should be empowered to select products that will resonate with them. 
  3. Build shopper excitement through innovation. Shoppers are always eager to try new products. Retailers can build on this by sharing new product information and availability through different marketing vehicles, including digital and social. Circana’s 2023 New Product Pacesetters contributed 18% to total store sales, an increase of 7 percentage points from 2022. 

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