Survey: Inflation dragging down online grocery sales

Is inflation killing online grocery shopping?

A new consumer survey by Swiftly says that inflation is stressing shoppers and represents a "huge opportunity" for brick-and-mortar grocers. 

From the release:

Food costs are becoming too expensive for the average American and are only increasing due to record inflation and ongoing economic challenges. Simply put, food costs are too high. Retailers have an opportunity to improve the shopping experience and establish the digital relationships that build long-term loyalty by modernizing and implementing digital tools and solutions that deliver the personalization, value and savings that budget-conscious shoppers demand.

Other key takeaways from the survey include:

• Nearly all (83%) survey respondents rely on some form of coupon, rewards app or loyalty program
• 74% have changed their grocery shopping habits in the last year
• 70% of respondents prefer and choose to shop in store at a local grocery store
• 33% are shopping in-store more than years' past

As a result of today's economic uncertainties, the survey confirms that consumers have adapted not just what they buy, but how they buy, and the recent uptick of in-store shopping presents a tremendous opportunity for brick-and-mortar grocers.

In tandem, the findings showcase how loyalty programs and digital coupons catalyze and motivate consumers to prioritize in-store visits. To successfully capitalize on these trends and grow their business, grocers must leverage retail technology tools that cultivate engagement, increase store traffic, boost basket size and reinforce loyalty, all while delivering a seamless digital to in-store connection.

"The grocery sector is at a turning point. After massive e-commerce growth throughout the pandemic, we are beginning to see a transition as consumer spending is tested by inflation and a looming recession. Furthermore, the potential consolidation of giant supermarket chains could also lead to increased prices, which would be especially hard for consumers to absorb in today's challenging economy," said Henry Kim, co-founder and CEO of Swiftly. "Findings from this survey amplify the need for today's brick-and-mortar grocers to solidify and own digital customer relationships and modernize digital revenue streams, in order to be competitive and maintain a loyal customer base."

Meanwhile, Walmart CEO Doug McMillon told CNBC in a recent interview about 75% of its market share gains in grocery came from shoppers with an annual household income of more than $100,000 in the past two quarters.

Retail food inflation is slowing, the USDA says. The Packer has reported that the 2022 calendar year inflation rate for all food is now projected from 9.5% to 10.5%, with grocery prices predicted to rise between 11% and 12% and restaurant food prices expected to increase between 7% and 8%.

Looking ahead to next year, the USDA said food prices are expected to grow more slowly but are still expected to increase at a rate above historical averages.

In 2023, all food prices are predicted to increase between 3% and 4%, with grocery prices expected up between 2.5% and 3.5% and restaurant prices predicted to increase between 4% and 5%.

It seems that deflation has started to show up in price charts, but there are several commodities that continue to show extreme pricing. Check out the price charts below: