Building a brand with staying power today is not a task for the timid. In a recent study, CivicScience found that consumers are looking for purpose-driven brands, but the public is heavily divided over what that means and which values are most important to them. What happens when you add inflation, supply chain issues, and Omicron into the mix?
Perhaps there’s no better place the current cocktail of volatility is reflected than in the CPG arena, where even the biggest brands are up against unprecedented challenges. CivicScience looked at how rapidly changing conditions are impacting consumer buying habits of food and groceries right now.
When it comes to shopping for food and groceries, a total of 73% of U.S. consumers say brand is important to them, as shown by current CivicScience survey data.
However, a recent survey of more than 2,000 U.S. adults finds that 38% of respondents recently switched the brands of food and grocery items they normally buy due to supply chain shortages, with 20% switching brands on multiple products.
Executives looking to raise prices to shoulder increasing supply chain costs may face even more fallout. Food prices continued to rise into December and have likewise had measurable effects on brand loyalty – one-third of survey respondents say rising prices have led them away from their go-to food and grocery brands in favor of more cost-effective brands.
Brand-switching among fast-moving goods like food and groceries is nothing new. When faced with out-of-stock grocery items, nearly 40% of people say they will choose to change brands rather than wait it out or visit another store – close to the same percentage seen at this time in 2020, prior to the pandemic’s onset.
Of course, there were far fewer stocking issues then. Now, that figure is bearing itself out in real-time, as more than 75% of the population face some degree of supply chain shortages when buying groceries. Over 40% have met with out-of-stock or low inventory on products they intended to purchase on at least three separate occasions in the past month, and 21% on five or more occasions.
Less Frequent Purchases
Shortages coupled with rising prices are shifting consumer buying patterns of both brands and categories. The majority (63%) of grocery shoppers are buying at least one type of food item less frequently.
The category hardest hit: meat, poultry, and fish – 38% are buying these less often due to rising prices and significant supply chain problems in the past few weeks. That’s followed by close to one-quarter of shoppers who say they are buying speciality/prepared foods and snacks/desserts less often, which can be attributed more to increasing price-sensitivity. Respondents are buying products less frequently from every category of groceries queried in the survey, including organic food and alcohol.
Panic-buying Is Back
On the other hand, the supply squeeze and inflation are inducing ’get-it-while-you-can’ panic-buying reminiscent of 2020, further complicating matters. One-quarter of grocery shoppers report they are currently buying more groceries than usual. Behind that figure, the survey shows that 17% of grocery shoppers are buying more groceries now to stock up due to supply issues. When asking the same question about prices, 14% of respondents say they are buying more out of concern for inflation-induced rising prices.
These two concerns aren’t mutually exclusive – when cross-compared, the data show just under 75% of those who are buying more due to supply issues are also buying more due to price concerns.
As it turns out, brand affinity is related to panic-buying. Shoppers stocking up now are much more likely to value brand over price when it comes to food and grocery purchases. They are nearly twice as likely as those who are not currently buying more.
So while more consumers are switching grocery brands in response to unstable conditions, the data suggest some shoppers will do what it takes to get their hands on the brands they know and love.