Market Overview

Making Sense Of Why Consumers Are Switching Their Grocery Store Habits

Making Sense Of Why Consumers Are Switching Their Grocery Store Habits

An interesting trend in the grocery store space is playing out: one out of five consumers switched to a new primary grocery store due to the coronavirus pandemic, according to a McKinsey survey of 1,500 shoppers.

The Survey: What Consumers Need

Shoppers are scrambling to new grocery stores because their old ones were either out of stock on many items or offer poor e-commerce and delivery options, the survey showed.

Food buyers also switched to grocery stores they believe to be cleaner or safer, located closer to where they work or live or offer more affordable prices.

Consumers in the 45-54 age group were most likely to switch stores, while those in the younger 25-34 group were least likely to switch. Those making at least $100,000 were found to have changed grocery stores at a greater rate than those earning less money.

Making Sense Of The Survey With Basket

Basket is a smart grocery shopping app where a community of shoppers can share real-time prices on products and inventory. Benzinga discussed the McKinsey survey with Basket co-founder Andy Ellwood.

Online Grocery Experience Frustrating For Many

The COVID-19 pandemic accelerated first-time adoption of delivery and e-commerce options for grocery stores, Ellwood said in an e-mail.

On the other side of the transaction, people who are new to online shopping are noting a "frustrating experience," he said. 

Many Basket users are expressing their desire to ditch online shopping for fresh produce, dairy and meats, he said. But consumers are likely to take advantage of curbside pick-up for "inner aisle" items where it "doesn't matter which one you pick from the shelf."

"Pre-COVID, quite a few of our shoppers told us they were using curbside for those products and then parking their car and going into the store to pick out their produce and talk to the butcher about their meat and fish selections," Ellwood said.

Does Loyalty Matter Anymore?

Retailers and grocery stores have dedicated considerable resources to retaining customers through compelling loyalty programs. One has to wonder if this was meaningless given the number of shoppers switching to other stores.

The Basket app is particularly useful in helping customers evaluate how much their loyalty to a store will cost them in terms of dollars or time, and then they can make the decision if extra costs are worth the perks and benefits of loyalty, Ellwood said. 

But at the end of the day consumers tend to have different priorities.

"For some shoppers, price will be the driver; for others, distance; and for others, the experience they have at the store, knowing the staff or enjoying the selection/freshness," he said. 

Brand loyalty is certainly down during the pandemic, Ellwood said.

On the Basket app, when a store is out of a certain product, it can be swapped for a comparable product. These swaps are "accepted by shoppers more than before," he said. 

What's Up With The High-Income Bracket?

One of the more surprising takeaways from the survey is that high-income consumers are more likely than others to switch their grocery shopping habits.

Logic could be the driver of the trend. Until recently, high-income earners didn't think too much about their shopping decisions and haven't experienced "much pain" in their grocery experience, Ellwood said.

But now the high-income demographic group is eating at home much more, which prompted them to reassess their options and realizing there are more shopping choices, he said. 

"And while they still may not ever claim to want to 'save money,' they definitely don't want to ever overpay." 

Young Shoppers: Challenging 'Unchallenged Routines'

Younger shoppers typically need to buy food items for their own personal needs and are more likely to shop more often and for a smaller total basket size, Ellwood said.

The "more mature" young shopper is now more likely to "do an audit" of their shopping behaviors and challenge their otherwise "unchallenged routines," he said. 

"With more and more retailers putting an emphasis on grocery in addition to other things in their store, [such as] Walmart Inc (NYSE: WMT), Target Corporation (NYSE: TGT) [and], Inc. (NASDAQ: AMZN), there are now more things to consider." 

Related Links:

Key Takeaways From BofA's Deep Dive Into Grocery Stocks

Coronavirus Drives Surge In Online Grocery Penetration For Players Like Amazon Prime Now, Walmart


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