How consumers are assembling value

LAS VEGAS — As consumers remain under financial pressure, they are no longer hunting for a deal; they’re assembling one, said Nicole Collida, managing director of US Retail & Sales Agencies at NielsenIQ (NIQ).

Speaking at Groceryshop on Sept. 22, Collida said shoppers are combining strategies, such as switching to lower-price brands (39%), shopping more often at discount or value retailers (34%), buying more private label (32%) and stocking up when preferred items are on sale (32%).

“It’s a durable shift in how consumers are curating a deal,” she said. “Promotion is still important, but promotion has to do things different than it’s done before. It has to drive value for the consumer in the way that the consumer is defining it.”

Some categories are faring better than others as food cost concerns persist. Looking ahead to next year, consumers intend to spend more money on fresh produce, about the same on fresh meat and less on instore prepared foods, according to NIQ’s 2027 Consumer Outlook Study. Notably, every purchase decision will be guided by justification rather than habit.

“An important note here is that consumers aren’t necessarily cutting spending,” Collida said. “We see them concentrating spending on the things that matter most to them and their family. And this is an important nuance because consumers will make decisions based on how they’re defining value and put those items in the basket, so that definition of value becomes critically important.”

The club channel has emerged as a clear winner against this backdrop, growing 9% over the past year while traditional grocery has remained flat. Yet only 11% of club sales are driven by promotion, versus more than 20% in other channels.

The club channel has emerged as a clear winner during the current economic environment, growing 9% over the past year, according to NielsenIQ.

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“Club is the clearest, most consistent proof point of structural value in our industry,” Collida said, pointing to membership, bulk economics, stock-up occasions and discovery as channel advantages. “Club will continue to win, and I think they’re making that value equation really obvious for consumers.”

The number of trips per shopper has increased at club and mass retailers while declining at grocery and dollar stores over the past three years, according to NIQ.  

“Grocery really does have to redefine itself and show up with a different value proposition because scale won’t be enough,” she said.

But scale doesn’t necessarily mean having a national footprint, she argued. “It can also mean availability of and the bandwidth to act on data.”

Rather than copy larger competitors, smaller and regional retailers should lean harder into unique advantages such as local sourcing and fresh assortment, she added.

“The lesson for all brands and retailers is to ensure that you’re defining the value proposition for consumers before they set foot in the store,” Collida said. “Don’t rent their attention with a promotion. Rather, really focus on bringing them into the store by delivering value for the occasion or the need state they’re looking to address.”