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Study Sheds Light On Grocery Behavior Shifts

food shoppingA new study offers insights on changing grocery shopping behaviors as a result of the recession, including which food and beverage categories are proving most and least susceptible to brand abandonment and which consumer segments have been most and least affected.

The online survey, conducted between May 28 and June 4 this year, was sent to a nationally representative sample drawn from Digital Research Inc.'s (DRI) online panel. Results are based on responses from 1,106 grocery shoppers. The margin of error is 2.9%.

Overall, about 40% of grocery shoppers report trading down to store brands since the recession hit, and just 29% say that they prefer name brands even if they cost more than store brands, according to the research from DRI and analytics services provider ThinkVine.

However, switching to private label isn't the most dominant change in grocery shopping habits. Well over half reported stocking up on sale items (58%), reducing spending on non-essential items (57%) and using more coupons/promotions. In addition, 47% reduced impulse purchases, 44% bought fewer convenience foods, and 42% made fewer trips to the grocery store.

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Nearly half (47%) reported spending less now than a year ago, (40% the same, 13% more). On a five-point scale with five representing "extremely important," 38% ranked getting the "absolute lowest prices" when grocery shopping as a five, and another 39% as a four.

However, concern with healthy eating and customer service continue despite the widespread focus on price and promotions. Just 15% said that they're willing to buy fewer fruits and vegetables to save money. Asked which behaviors they would engage in in order to get the lowest prices, least-likely changes included patronizing stores with a poor selection of natural/organics or poor selection overall, bad customer service or slow checkouts.

Most-likely cost-saving behaviors included (in order) clipping coupons, buying only on-sale items, shopping at a store with better weekly specials, switching to store brands, comparing store flyers, switching to lower-cost brands, browsing Internet coupons, bagging one's own groceries and driving to multiple stores to get the best prices.

About half (51%) say they expect to continue to spend the same for the rest of this year, and 47% say they expect to make additional cutbacks. Only 3% expect to increase spending.

Categories Hit By Changes

Shoppers were asked whether they had made any of the following changes during the past three months in regard to specific F&B categories: only buying the preferred national brand with a sale or coupon, buying a different size of the preferred brand, buying a lower-priced national brand, buying generic/store brands, buying the preferred brand at a lower-cost store.

More than half indicated that they'd made at least one of these changes in regard to cookies (57%), crackers (54%), ready-to-eat cereal (53%), salty snacks (53%), juice beverages (53%), salad dressing (53%), and paper towels (52%). Nearly half (49%) indicated the same about pasta sauces, orange juice and laundry detergents.

Categories less susceptible to changes were milk (36%), pet products (40%), coffee (43%), bread (43%), carbonated soft drinks (44%) and yogurt (46%).

Among the majority who did make some behavior change, switching to generic or store brands was most common for milk (19%), paper towels (15%), bread (14%), cookies (14%) and crackers (12%).

Eleven percent reported switching to private label within ready-to-eat (RTE) cereal, orange juice, salty snacks, juice beverages; 10% within past sauces and yogurt; and 8% within laundry detergents, carbonated soft drinks, salad dressings and coffee. Pet products? Just 7% switched to private label.

Among those who changed behaviors, categories in which consumers are most likely to buy a preferred brand only when there is a sale or coupon were salad dressings (29%), RTE cereals (27%), crackers (26%), salty snacks (25%) and cookies (25%). Least susceptible to this behavior were brands in the milk (7%), bread (11%), pet products (16%) and coffee (19%) categories.

'Nouveau Poor' Among Biggest Shifters

The study identified six distinct shopper segments based on economic impact, lifestyle changes and shopping behaviors.

Consumers who have most altered their grocery shopping behaviors fall into two segments dubbed "nouveau poor" and "hard times."

The nouveau poor (4.6% of the population) has been created by the recession. These consumers have high education levels, but are experiencing lifestyle upheaval after a dramatic reversal of fortune. About one-quarter are unemployed and job hunting; 67% are having mortgage/foreclosure issues, and 82% are having trouble paying bills.

The hard times segment (21.1%) comprises people who are struggling to make ends meet under mounting economic pressure. About half have seen income reduction, have credit card debt, and are struggling to pay bills; and 17% are unemployed and job hunting.

The "modest means" segment (28%) comprises consumers who were already used to economizing and are now further tightening their belts.

In better position are "optimizers" (12%), characterized by strategically balancing brand, convenience and quality with affordability; "cautious success" consumers (26%), who are doing well but avoiding excessive spending; and the "unfazed" (8%), who basically haven't felt the need to change their shopping behavior.

Nearly 71% of the nouveau poor and 61% of the hard times segment report substantial changes in their lifestyles made to stretch their dollars, compared to an average of 31% across the segments. In addition, 69% of the nouveau poor and 58% of hard times rate getting the absolute lowest prices as extremely important, versus 48% of modest means, 40% of optimizers, and 9% of cautious success. (Interestingly, 20% of the unfazed also rank this as extremely important.)

The nouveau poor dominate discount grocery stores (18% usually shop in these), although they also account for 10% of store visits to higher-spend grocery outlets.

The two hardest-hit segments are also least likely to to agree that they buy name brands even if they cost more than store brands, and least likely to look for foods that are quick and easy to prepare.

However, even these two segments are reluctant to give up on healthy eating. In fact, they are somewhat more likely than other segments to agree that healthy eating is very important to them, and about equally likely to say they're trying to avoid processed foods and buy more organic/natural foods.

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