How consumers prioritize indulgence vs. inflation

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How consumers prioritize indulgence vs. inflation

17 Jul 2023

Joanie Spencer

Since 2008, Joanie Spencer has covered the retail and wholesale sides of the baking industry.
Serving associations such as the American Society of Baking (ASB) and BEMA, Joanie is also in demand as an industry presenter on bakery operations and trends. She holds a bachelor’s degree in communication from Rockhurst University and a master’s degree in journalism from the University of Missouri.

When she’s not running or playing soccer, Joanie spends her time with her husband and 11-year-old son.

KANSAS CITY, MO — In a post-COVID era, consumers view purchase barriers far differently than they did just a few years ago. When inflation hit an all-time high, people had to rethink their spending, but they did so in more strategic ways. Unlike recession years of the ‘90s and early 2000s, when consumers halted spending in specific aspects of their lives, the “life’s too short” post-pandemic effect is keeping concepts like loyalty and self-care top of mind.

To that end, areas like the grocery perimeter, where offerings like fresh bakery products might be perceived as more expensive, often remain attractive to consumers based on how they see the value proposition.

“Value means different things to different people,” said John Dubois, VP, fresh foods of Acosta Group. “Retailers will make an immersive perimeter experience for the consumer because some people choose a store because they prefer the experience.”

Crossover in the perimeter helps accomplish that, according to DuBois, by creating meal solutions that come from different areas of the store, including meat, vegetables, bread and dessert. And with omnichannel more present than ever, the convenience of using store apps can also feed that loyalty.

While there are value-related offers to help make food choices easier, consumers are also making smaller, more strategic shifts in their spending, oftentimes to enable more indulgent food purchases. This often comes as a result of seeing indulgence as a form of self-care, as people prioritize wellbeing through a new lens.

“What we’re seeing right now is that people are delaying bigger-ticket items,” said Kathy Risch, senior VP, shopper insights and thought leadership of Acosta Group. “They’re not cutting back on small indulgences like a candy bar or a cake because those things won’t really make an immediate difference. But they might put off purchasing a car or they’ll tone down the vacation.”

That’s when grocery trips become a numbers game.

“They’re doing the math at the shelf and even going to more stores in search of the deals. It’s a stressful scavenger hunt.” — Kathy Risch | senior VP, shopper insights and thought leadership | Acosta Group

“It’s all math,” she said. “They’re doing the math at the shelf and even going to more stores in search of the deals. It’s a stressful scavenger hunt.”

According to Acosta Group shopper surveys, consumers are saying they’re cutting back on splurging, but a deeper dive into the data reveals that people are making those cuts strategically. While there may be fewer trips to the store — leading to less impulse purchases — they’ll keep indulgent items in the basket, even splurging in certain areas, often despite the potentially higher price tag.

“Some people are saying they’ll cut back in one category in order to splurge in another,” Risch said.

While Acosta Group research indicates that roughly 60% of consumers are eating out less, that creates opportunities for those splurges in areas like the perimeter bakery.

“People are still seeing that experience in a more affordable way,” DuBois said. “And a brick-and-mortar retailer can offer that option.”

These days, everything is relative. Even when prices are high in-store, consumers can still see certain items as affordable indulgences. In fact, Acosta Group reported that 50% of shoppers said they will splurge on certain items to treat themselves or their family despite high prices.

In response to the open-ended research question, shoppers indicated items they would splurge on included things like dessert, ice cream, cakes and cookies. Additionally, items like pizza, potato chips and chocolate topped the list in response to what comfort foods they fall back on during stressful times.

While, economically speaking, Americans are bracing for a recession, their attitudes and spending habits indicated that indulgent baked goods may remain worth the splurge.

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