Consumers haven't abandoned traditional grocery shopping or traditional, brick-and-mortar grocery retailers—not by a long shot—even as more fully reopened restaurants and increased competition from ghost grocers, meal-kit companies and niche delivery services have jostled for a greater share of their food dollars, the latest consumer study from market researcher TABS Analytics finds.
Retail purchases of foods and beverages in 14 of 15 categories that TABS tracks have grown markedly in the past two years, with 2021 purchases continuing to climb off a high 2020 base, according to TABS' ninth annual Consumer Value Study. "Contrary to the fears of many in the industry, sales of consumables continue to grow even after the economy has opened up," TABS Analytics President and Chief Analytics Officer Kurt Jetta wrote.
Consumers' reported purchases of frozen pizza, for example, are up 24% on a two-year stack. Sports drink and salty snack purchases are up 21% each, and purchases of cookies and carbonated beverages are up 19% and 18%, respectively.
And they're still looking for deals: 84% of the 1,000 consumers TABS Analytics surveyed this month said they use at least two bargain-hunting tactics (e.g., seeking out loyalty-card deals, perusing store circulars for promotions and choosing stores that offer everyday low pricing) regularly. Around one in six shoppers regularly uses at least seven deal tactics to save money.
This continued strong appetite for deals is notable for a few reasons, Jetta noted. First, "heavy" deal users—those who use seven to 10 bargain-hunting tactics frequently—are the biggest grocery buyers overall. They account for only 15% of shoppers but represent 30% of grocery sales. These shoppers buy more often and their baskets are bigger, Jetta wrote.
Second, deal availability has declined as some grocery retailers have sought to seize on strong consumer demand by scaling back promotional and clearance pricing. The temptation to curtail deals may be strong in the face of rising wholesale prices, but doing so is a risky move, according to Jetta. Consumers, too, are noticing rising prices for the foods and beverages they buy, and whether they're shopping in-store or online, many are willing to switch retailers for a better deal.
Half of grocery shoppers switch outlets looking for deals, TABS' study found, and among online buyers, stated preference for a particular retailer fell from 2019 (63%) to 2021 (56%). Two-thirds of shoppers said they seek out everyday low pricing, and 49% said they actively shop for deals. With inflation expected to remain around 5% through the rest of 2021, according to commentary from Fannie Mae last week, in-grocery's biggest users are likely to feel the hurt from rising prices throughout the grocery store—and retailers need to avoid the "foolish" move of pulling back on their deal offerings, wrote Jetta. "The strategy should be focused on inducing more trips per shopper and capturing more transactions while they are there," he noted.
Jetta reiterated his message from TABS' 2020 survey report that e-commerce for the vast majority of grocery retailers is not and cannot be profitable, if current trends hold. Walmart retained its No. 1 position for online grocery sales, capturing 32% of online grocery purchases. Amazon lost share, according to TABS' study, accounting for 21% of consumer-reported online grocery transactions in 2021 vs. 32% in 2020.
Overall, the share of shoppers who said said they've purchased groceries online increased to 62% in 2021 from 56% in 2020 and 55% in 2019. However, the share of those who buy groceries online regularly (at least six times per year) stood at 35%—the same as in 2019.