Grocers can expect to see consumers responding to price increases this holiday season, as customers will be bargain hunting and shopping earlier to fill their Thanksgiving menu, according to a new KPMG study. In October, food prices were up 5.3 percent for the year and inflation reached its highest point in 30 years, the U.S. Department of Labor reported.
KPMG surveyed U.S. consumers on the impact of higher prices and supply chain challenges on their Thanksgiving and winter holiday grocery shopping, and found that nearly 75 percent are changing their Thanksgiving grocery shopping plans to respond to higher prices and shortages.
The study also revealed that consumers intend to mark Thanksgiving with bigger celebrations than last year, in line with the size of gatherings before the COVID-19 pandemic.
“Consumers are showing a strong desire to get out and get together, good news for retailers, even as consumers recognize the need to be creative to offset higher prices. This is a trend that we have seen consistently across recent KPMG studies,” said KPMG U.S. Consumer and Retail Strategy Leader Scott Rankin.
In the new study, 36 percent of consumers said they plan to host or attend gatherings of 10 or more people, up from 19 percent in 2020 and approaching the 40 percent of Thanksgiving 2019. Most consumers, 64 percent, plan to host or attend small gatherings of fewer than 10 people, down from 81 percent a year ago and close to the 60 percent in 2019.
To counter higher Thanksgiving food prices, consumers intend to spend more time searching for bargains at their grocery retailer (28 percent), buy different brands (23 percent), prepare different meals (21 percent) and shop around (21 percent).
“Consumers are clearly voicing their intent to be responsive to inflationary price increases including shopping around instead of making fewer trips which was the trend in the prior year,” said KPMG U.S. Consumer and Retail Sector Leader Matt Kramer. “For grocers, decisions on the timing of promotional activity to attract customers while still combating the inflationary environment and supply chain challenges will be a key balancing act as they look to retain their loyal customers.”
In response to potential product shortages, 35 percent of consumers intend to shop earlier, 25 percent plan to reduce the size of their menu if products are not available, and another 24 percent aim to find an alternate grocery retailer if items are not available at their primary outlet. Nearly 20 percent of consumers expect to buy online from their favorite grocer when products are out of stock in the store.
To speak with KPMG Consumer & Retail leaders about the impact of higher prices and supply chain challenges on consumers and retailers, please contact Mike Alva.