What consumer behaviours might shape the grocery industry in 2023?
It was the best of times; it was the worst of times. A sense of relief and hope emerged in 2022 as the country slowly returned to "normal" following more than two years of COVID-19, only to be met with record-high inflation and rising food prices. Both have had an impact on Canadians’ shopping behaviour. So, what’s ahead in 2023? We spoke with Casey Ferrell, Kantar’s senior vice-president, head of U.S. and Canada MONITOR – which delivers insights and trends based on a nationally representative study of 5,000 Canadians conducted at the beginning of the year – about the trends grocers should pay attention to and how the definition of value is evolving.
The interview has been edited for clarity and length.
What consumer trends should grocers be aware of heading into 2023?
Well-being trends are always at the top. What we're seeing in our data is people are increasingly thinking about mood as something they can have on demand. We call this trend “mood to order.” We're seeing people going into retail spaces, not just looking for products that offer some kind of mood boost or benefit, but also a mood boost from the environment itself.
They expect a mood boost from the experiential part of shopping. Something else we've been tracking is what we call “supernatural.” As consumers look for the latest in natural, the ingredients are getting more exotic. We see companies looking farther afield for ingredients that they position front and centre because there's an appetite for the increasingly exotic.
“Rest and reset” is a third trend we're tracking. Sleep is obviously understood as a critical component of people's well-being, but bucking the busy culture is something we're seeing, especially among gen Z, where the quiet quitting narrative suggests people are looking for a healthier relationship to their schedules. This is manifesting in ways people think about routines, occasions and rituals around food.
How does mood to order translate to the e-grocery experience?
The Canadian consumer's relationship to technology has always been at arm's length – we don't embrace invasive technologies. Yes, e-comm experienced an explosion in 2020 and 2021 and there's no putting that toothpaste back in that tube, but e-comm affinity has not changed at all. People do not like it any more than they did before the pandemic. Canadians generally are not bowled over by the emotional component of technology. It’s transactional. There is probably some effort being put towards making these online retail experiences more experiential, but I don't know how far that's going to get with Canadian consumers. The bigger opportunity with a trend like that is in real-life experiential. And Canadians are all too happy to get back to brick and mortar.
How will these trends impact consumer loyalty and how can grocers maintain that loyalty during inflationary times?
Loblaw’s price freeze on its No Name products was greeted with skepticism, but I think the optics of it were smart. We’re seeing a correlation between trust and price – people have price thresholds. It’s beneficial to think about which products you are willing or unwilling to budge on when it comes to price. For instance, Costco won't change the price of its hot dog/soda combo even though it's a loss leader. If they do, it'll trigger a wave of consumer behaviour that'll be bad for business. Loblaw’s and those chains making proclamations to hold certain prices steady is a way to build trust and loyalty. People react as if they've been lied to when they see businesses or brands adjusting prices without warning, or adjusting prices on things that are at the centre of the brand’s value proposition. There are peripheral brands, but then there's the flagship brands and those items have certain emotional meaning to people. When you mess around with those prices, you can trigger an emotional reaction in addition to a dollars and cents reaction.
How can grocers leverage these trends?
Some banners do a better job than others, but think about what Loblaw has done with its lighting and aesthetics. There’s more appetite for some of that to come down market so that the lighting and the colours are softer, so that the subconscious experience of walking the store is more pleasant, more mild, and less harsh. And that's that kind of mood creation aspect that I think people are increasingly mindful of, or at least pay a bit more attention to, as they realize those background stimuli can have a meaningful effect on how you feel. If you're mindful of that, you're going to be more preferential to grocery store environments that go that extra mile from an aesthetic standpoint.
And, I think there's opportunity for centre store products to lean into some of the supernatural types of ingredients, exotic providence, and the sort of more spiritual benefits. Same with rest and reset. I mean, it's a similar trend in that it's a lot about positioning and I think centre store products have the opportunity to capture people in the moment and speak to them with product attributes that tap into some of these emerging appetites.
These are lifestyle trends that we see and those can translate into real-life behavior in a grocery store.
With food inflation top of mind, customers are seeking value. What factors play a role in a consumer’s value equation?
Our data shows nobody wants to buy the cheapest option. It’s not aspirational – nobody wants to do it. It's something they're forced to do. And I think brands, especially food and beverage brands, can get caught up in discounting battles and a race to the floor, or depending on the category, forced to pass on costs to the consumer. So, prices go up or down, rarely are they staying the same.
What this doesn't reflect is that Canadians' value equation has evolved since 2008 when there was a potential severe downturn. The value equation is more complex now. It's not just about price. Canadians are famously price sensitive, but price is not the only thing that matters in the value equation. Quality, convenience, service – they're not necessarily attributes that Canadians are willing to set aside to focus on price alone. There's an opportunity for brands to really lean on some of those other aspects of the value equation if they can’t adjust the price.
This article was first featured in Canadian Grocer’s December/January issue.
