Low prices less of a differentiator

Articles
February 15, 2012

Low prices less of a differentiator

Consumers seem to realize supermarkets can do just so much to keep food prices sharp as costs rise.

Consumers have it tough today, but most don’t focus unduly on low prices when selecting a primary supermarket, indicate findings of the 2012 National Grocers Association-SupermarketGuru Consumer Panel Survey Report.

Asked how much low prices affect their choice of a store where they’ll buy most of their food, the percentage of U.S. adults who say it is “very important” slid again – from 51.0% in 2009 and 2010, to 44.0% in 2011, and to 39.5% in 2012, the data show.

People seem to realize there’s just so much supermarkets can do to keep prices low. Of the consumer groups that do regard low prices as “very important,” nearly half (45.0%) come from the three lowest income tiers – $45,001-$65,000 (19.2%), $25,001-$45,000 (15.8%), and $25,000 or less (10.0%).  That may not surprise, but this might:  this collective 45.0% figure is lower than 2011’s 49.0% and 2010’s 56.0%.  Even if the food price pain isn’t as intense as it was during the recession, it seems as if upper income tiers are feeling it as well.

The research also shows that low prices are more of a concern to African-Americans (55.1%) and Hispanics (51.4%) than to Caucasians (38.4%); these are the percentages of each group that call low prices “very important.”

Still, we’re in a period of food price inflation, and keeping food costs within the household budget remains an ongoing concern for consumers overall. A majority of U.S. adults surveyed (56.4%) says low prices are “somewhat important” in their selection of a primary supermarket.

Money pressures are also why people continue to implement numerous savings strategies. One of the main ways they stretch their dollars is buying items on sale and money-saving specials.  Most consumers (54.8%) still feel this is “very important,” although the figure is less compelling than in recent years. In 2010, 60.0% said this, and in 2011, 55.0% did.   We believe four years of bargain hunting has worn thin on a stressed public, who’d rather pay fair prices at a convenient supermarket they generally like.

That’s not to say people don’t get excited and stock up when they score a deal. In all, 93.8% think items on sale and money-saving specials are “very/somewhat important.” This includes 39.0% in the “somewhat” slot, up from 37.0% in 2011.  Of 11 income tiers represented in the survey, the four lowest (from $25,000 or less to $85,000) account for a collective 57.5% of respondents who call this “very important.”

Although consumers can save automatically when they belong to a retailer’s frequent shopper program or savings club, survey findings show this isn’t a key factor in their choice of a primary supermarket. Perhaps if food stores targeted their promotions better to deliver relevancy and value, these percentages would be higher. As it is, fewer than one-quarter of U.S. adults (23.2%) say this is “very important, and four out of ten (39.8%) feel it is “somewhat important.”