At the start of the pandemic, worries that the global economy was heading into a depression were pervasive. Fast-forward two years and this is no longer what’s on people’s minds. While the pandemic continues, many economies, including Canada’s, are running hot.
At the start of 2022, Canada’s Consumer Price Index reached its highest level in three decades. Earlier in 2021, the dominant narrative was that the inflation we were experiencing was transitory, but in 2022 that view has changed with inflation proving to be stubbornly persistent.
The Bank of Canada has signalled that it intends to respond aggressively with rate hikes to cool this inflationary trend. With Canadian households among the most indebted in the world, and with the cost of living already very high, this will no doubt have ramifications across industries, including grocery.
Canadians were already value-conscious grocery shoppers. In consumer surveys when we’ve asked what matters most when shopping for food, price tops the list. Though not surprising, this underscores how the importance of price and value will increase as rates rise and many Canadians pay more for the debt they’ve accrued.
In this environment, how can grocers respond and convey value to shoppers?
Mintel’s research substantiates what is already abundantly clear: promotional activity resonates. More than two-thirds of Canadian shoppers say they look for sale items ahead of non-sale items either all or most of the time according to Mintel’s The Budget Shopper report, published in 2021. As grocers vie for traffic, offering compelling promotions will prove even more important with half of shoppers also indicating they will shop at different stores to get the lowest prices on the items they want.
Savings can also come with other benefits. Canadians show deep concern over food waste and its impact on the environment. For grocers and food and drink manufacturers, helping Canadians save can align with environmental and ethically-minded initiatives that are good for both the planet and for wallets. One example is leveraging apps that help shoppers get the most out of their purchases with creative tips for using up (rather than tossing) their leftover food. And food rescue apps, such as Flashfood, are also gaining traction. These apps alert consumers to foods that are nearing their expiry date and can be bought at a discount at (partnering) grocery stores rather than ending up as trash. It’s better to save and eat the food than discard it—grocers can capitalize on this.
Even as Canadians are likely to tighten their budgets, given current economic conditions, the reality is the vast majority are not spending too much time counting their pennies. Half of Canadians say they “watch their finances but don’t follow a budget” and fewer than one-in-five say they “follow a strict budget” (51% versus 16%, respectively). What this means is Canadians are busy and don’t have time to itemize the cost-benefit of every expenditure. As Canadians look to make tradeoffs, grocers can get creative with suggested meal solutions using different items on promotion that come in on, or below, budget such as dinners under five dollars per head. It all comes down to making saving easy for shoppers and doing some of the work for them.
The pandemic has brought many surprises with high inflation being one of them. As expenses rise, grocers that can provide shoppers with easy and creative solutions that help them save will be particularly relevant in 2022.
This column appeared in Canadian Grocer's March/April 2022 issue.