retail news in context, analysis with attitude

The seventh edition of the dunnhumby Consumer Pulse Survey is out, finding that "Americans, for the first time since the pandemic began, are beginning to feel noticeably better about personal finances and are now prioritizing value over speed when they shop."

The survey found that "58% of U.S. consumers reported that the U.S. economy is weak, a sharp drop of 17% from last March when 75% reported the economy was weak. The study also found that 39% of consumers reported that their finances were poor, a drop of 15% from just November when 54% reported their finances were in bad shape and in the court was in the grips of the third wave of the pandemic. Americans are now at the lowest level of worry about the virus (23%) since the crisis began and have dropped nine percentage points since November on the dunnhumby Worry Index.

"Even though U.S. consumers’ confidence is beginning to rebound, consumers remain concerned with the cost of food with 43% saying they are paying more than they did before the pandemic. In contrast, just 24% reported they are paying less for food. As a result, 80% are taking at least one action to seek value with the most popular action being to shop at stores with everyday low prices (52%). Consumers return to value seeking aligns with the dunnhumby 2021 Grocery Retailer Preference Index which postulated that the importance of value would return once consumers worry about the virus dissipated."

Some finding from the survey:

•  "Value seeking consumers (70%) far outstrip quality seeking consumers (13%) in the U.S. Quality seekers are primarily shopping high quality stores and are willing to pay more to get quality. Half of quality seekers are using one of these behaviors: shop at stores with the best quality (38%), willing to pay more for quality (19%), buy more expensive item (8%), and don’t pay attention to prices (7%)."

•  "Consumers are utilizing multiple shopping tactics to seek value in the face of rising prices. After shopping at everyday low price stores (52%), the most popular shopping tactics by consumers are: only buying some brands on sale (36%), stocking up on products that are on sale or promotion (36%), searching online to find the best sales (34%), searching online for coupons (34%), and buying private brands when available (33%)."

•  "Online is now a fully adopted behavior and has grown stronger in every wave. Shopping in stores has dropped from 77% of all trips in March 2020 to 64% in February 2021, while shopping online (pickup and delivery) has increased from 23% in March 2020 to 36% in February 2021."

•  "The number of online trips is also increasing. In March of 2020, consumers reported that online shopping trips made up 1.3 of their trips each week but by the end of February 2021, online trips now made up 3.6 of their trips each week."

•  "Consumer satisfaction with shopping online has been ahead of, or equal to shopping in store since September 2020. In addition, survey respondents reported a 53% net satisfaction for pickup and 49% for delivery."

•  "Walmart continues to dominate all stores when it comes to value. Thirty-three percent of respondents mentioned Walmart first when asked which stores provide the best value, followed by Kroger and Aldi both tied at 10%, and then by Amazon at 6%."

KC's View:

There's an interesting dynamic unfolding I think that puts mainstream/middle-of-the-road stores potentially at risk.

It is very difficult for any retailer to out Walmart Walmart, or out Amazon Amazon, simply because of their breadth and ubiquity.  (I don't think Amazon worries about being defined as a value retailer by just six percent of respondents, because it is defining "value" differently than most traditional competitors.)

Seems to me that stores that leave their value equation insufficiently defined are at risk of seeing their market shares eroded by the likes of dollar stores and limited assortment stores that are growing their footprints around the country and focusing relentlessly on their value proposition.

On the other hand … there are a lot of folks out there who believe that as we emerge from the pandemic, the after-times, at least for the next few years, will be characterized by an economic boom that could take the emphasis away from price and value.

One thing seems clear - a complacent, business-as-usual approach to retailing doesn't make a lot of sense these days.  Or any days, for that matter.