Inflation is coloring consumer shopping behaviors, retail consultant says

CHICAGO — Describing how consumers are adjusting their shopping habits in response to inflation, retail consultant Tom Barnes outlined strategies for success for marketers and retailers.

Barnes, CEO of Category Partners LLC, spoke on Aug. 19 at the U.S. Apple Association’s Industry Outlook event in Chicago.

Some consumers are “trading down” in response to worries about inflation and a slowing economy. In fact, research last year indicated that 68% of consumers usually or always comparison shop, with another 20% sometimes comparison shopping.

Despite a shorter crop in Washington that may keep prices firm, Barnes said there are plenty of reasons for optimism about the apple category.

For one, apples are the largest retail category among fresh fruit. “There is no real substitute for apple dollars,” he said.

The amount of variety innovation is creating both consumer and retail interest. However, he urged marketers to do more than “display and pray” when introducing new varieties. Instead, reaching out to consumers directly to get their input about new varieties is essential, he said.

Some of the important trends that the apple category is experiencing, he said, include the tactic by some national retailers to use red delicious apples to provide consumers with a low price point.

While the discounted price of red delicious relative to other varieties makes that strategy work, he cautioned that consumption may suffer if red delicious doesn’t meet consumer taste expectations.

“What you need to do is you have to have competitive pricing, not just with the different varieties, but even against the other retailers,” he said.

He noted that many specialized grocery retailers don’t carry red delicious, instead focusing on newer and more flavorful varieties.

Another trend is the rising sales of dollar stores in relation to other food retail formats. Increasing apple sales in dollar stores is important to protect sales, he said. 

More retailers are also trying to move to in-store digital shopping, creating a system where a consumer scans an item and puts it in their cart, without having to go through a checkout line. However, the random weight of fresh fruits and vegetables is a barrier to that approach. That may eventually translate to more packaged produce sales and pricing by each unit rather than by the pound, he said. 

Another apple industry trend is that the Cosmic Crisp apple is taking a larger percentage of the branded apple category, he said.

“The branded share/variety battle will intensify, fueled by Cosmic Crisp, but we can’t forget the foundation varieties,” he said. Foundation varieties, which make up about 65% of the apple category, include gala, fuji, granny smith and red delicious.

“Prices are going to stay elevated, and so we need to just be smarter on how we are marketing ourselves, and how we (bring) that consumer back into the apple category,” he said.