Grocery

Taking a look at 2022 consumer spend patterns

With inflation at an all-time high, have consumers shifted their food shopping behaviors? At CDLX, we have the purchase data to uncover the most relevant insights within grocery and beyond.

Traditional grocers are losing share of stomach in multiple directions (-3pts vs. 2019) – act fast to retain customers.

• Restaurant captured 42% of total ‘share of stomach’ in 2022, up 1.6% from 2019
• Warehouse retailers also ended the year on a good note. Their share of stomach increased from 12.5% in 2019 to 14.5% in ’22
• Interestingly, share of trips is flat for Big Box retailers, but they have lost ground in terms of total share of stomach
• With the exception of Warehouse, which has benefited most from the inflation surge, traditional grocery appears best positioned to recapture share of stomach

Shopping channel preference varies by subcategory, so an omni-channel strategy is imperative.

Online shopping at Big Box retailers is up: 6.5% of total share of stomach in 2022, up from 2.9% in 2019 with the addition of Walmart+ and Shipt to the category.

Conversely, in-store shopping is up within Warehouse, Traditional, and Discount grocery, with increases in both trip and wallet share YoY.

Consumer shopping behavior is more unpredictable than ever, but brands can rely on performance marketing to help drive sales.

Opportunity to reclaim share exists across all grocery categories. Cardlytics can help identify and convert those audiences on behalf of your brand – and we can prove it.

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The grocery industry is undoubtedly a bellwether for the impact of the cost-of-living crisis on consumers. While costs are rising in many places, the price of everyday basket essentials remains a proxy for inflation. 

That puts grocers at the epicentre of the debate when it comes to how and whether they should be looking after their customers in such challenging times. 

Every grocer is battling rising operational costs, from the increasing energy cost of keeping freezers and fridges cold through to the price of fuel for home deliveries. How can brands still support their customer base through tough times, while still protecting their bottom line? 

Invest in essentials to support tighter budgets

Cardlytics spend data across 24 million UK bank accounts shows that since 2020 the average cost of the weekly shop has increased by 20%. The rising pressures of inflation, supply chain issues and labour shortages are all forcing the price of everyday essentials up. 

A recent Cardlytics poll of 2000 UK adults found that almost nine in ten (88%) consumers have seen a rise in their weekly shop. As wages stagnate, and bills look to skyrocket, they’ll be searching for any way possible to save a little extra cash.

Use loyalty schemes to engage customers

One option is to increase investment in the basics. Asda’s launch of a new essentials range is one example of how a brand is stepping up and keeping the price of essentials low.

But with cost now becoming a clear deciding factor in where to spend, consumers are increasingly shopping around to save the pennies. Our spend data shows that in the past year, total spend at the big four supermarkets fell 7% and spend at convenience stores fell 8%, whilst discount supermarkets managed to uphold their market share in an increasingly competitive industry.

A new basics range might help at one end of the spectrum, but if consumers are then shopping elsewhere to fill the rest of their basket, how much is it really helping?

With over 56% of consumers saying they’re looking to shop with cheaper brands to save money, grocers should consider how they can make customer loyalty the priority. Investing in loyalty programmes that help customers save money on their shop – be it offers on the items people buy most or rewards each time they shop – will go some way to help grocers hold on to their customers and attract new ones.

Cardlytics is able to provide brands with a ‘whole wallet’ view, to understand what share of a customer’s category spend they’re receiving and how much headroom a customer has to make sure they’re targeting the most relevant and valuable customers.

Invest in price, play the long game

Every grocery retailer faces an ongoing battle to support their customers, however, as the cost-of-living ramps up, it’s crucial that additional costs aren’t passed on to the consumers. Otherwise, brands risk losing their loyal customer base and may struggle to defend their market share – especially in the run up to the all-important ‘Golden Quarter’. 

By investing in price now to support customers when budgets are tight, grocers can win longer-term brand loyalty for helping customers when they needed it the most.  

Those brands that step up to support customers now, will reap the rewards in the long term. 

Which industry will take the bulk of consumer spend? 

What used to be considered two separate household budgets, one for groceries and one for dining out, has morphed into one overall food budget, thanks to pandemic-led shifts in how people eat. More dinners are being eaten at home causing restaurants to expand into delivery and take-out options. Meanwhile, grocery stores braced for a surge in traffic as more consumers requested delivery or curbside pick-up. While all industries faced upheaval during the pandemic, there’s no doubt that restaurants and grocery stores were among the most affected, with consumers’ eating habits and routines changing overnight. Both grocery and restaurant industries now face similar challenges in an uncertain marketplace - how to grow revenue and defend wallet share in the face of emerging third-party players.

But instead of working in competition with one another, Cardlytics’ Mike Novosel, industry lead for grocery, gas, and convenience and Matt Drewes, industry lead for restaurant, share how the two industries can peacefully coexist by answering these questions:

• What is your occasion share? Do you know how much you’re losing, gaining, and what you need to defend it?
• How do you want your customers to shop with you?
• What is your biggest opportunity?

In our first ever B2C Marketing Showdown, brands will learn how working with a partner like Cardlytics can help them retain their customers, regain lapsed customers, and perhaps most important to growth, earn customers that shop in-store and online.  

Watch this free webinar to knockout the competition and grow incremental revenue across categories.

https://youtu.be/6dbbXzX4zA4