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Business Observer Friday, Aug. 19, 2022 1 month ago

No end in sight for rising food prices, consumers seek alternative

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As food prices go up, so do the sales of private label brands.
by: Louis Llovio Commercial Real Estate Editor

Private label grocery products, often thought of as way to save money when grocery shopping, have seen an uptick in sales as inflation and supply problems have driven prices up.

According to Catalina, a St. Petersburg marketing firm that specializes in shopper intelligence, shoppers are turning more and more to retailer’s store brands and away from name brands as they try to cut costs.

The company’s Shopper Intelligence Platform finds sales of a half-dozen products are up double digits, with items like canned fish up 10% and soup 17%.These two particular items shows “consumers are looking for affordable lunch and dinner solutions,” the company says

“The data clearly indicates that shoppers have become more price-sensitive and value-driven in recent months,” says Sean Murphy, the chief data and analytics officer at Catalina.

And there’s a good reason for that.

The latest Consumer Price Index report released Aug. 10 shows while inflation is down, the cost of food at home index is up to 13.1% from last year. That’s the largest year-over-year increase since 1979.

The U.S. Bureau of Labor Statistics reports that the food at home index rose 1.3% in July, as prices of major grocery store food categories went up again. According to the report, dairy and related products were up 1.7%; meat, poultry, fish and eggs were up 0.5%; fruits and vegetables were up 0.5%; and cereals and bakery products were up 1.8%. The cost of food overall is up 10.9%

At Sprouts Farmers Market, which is opening a new store in Cape Coral in October, a spokesperson says it’s not one single thing that drives price up but that the chain “strives to provide great quality at value prices every day.”

To that end, Jack Sinclair, Sprouts’s CEO, said in an Aug. 3 earnings call that the chain is doing what it can to address rising prices while getting shoppers to buy more.

“As the consumer is being pressured by inflation, we are proactively focusing on value across the store,” he said. “We’re driving value through pack and pricing, leaning into our great produce pricing, emphasizing our large bulk offering where customers can control their costs, expanding our local produce, which provides more attractive pricing, and running BOGO and vitamin offers to help customers save.”

 

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