Despite economic uncertainties and concern over food prices, consumers remain optimistic about managing their budgets and creating memorable holiday experiences. FMI – The Food Industry Association’s annual U.S. Grocery Shopper Trends: Holiday Season report provides a comprehensive look into the evolving landscape of holiday shopping.
“While consumers remain understandably concerned about the cost of food impacting their holiday meal preparations, we continue to see remarkable resilience and adaptability among shoppers,” said FMI President and CEO Leslie G. Sarasin. “Whether it be shopping deals and sales or choosing store brands, Americans are stocking up and preparing for the holidays early and eagerly.”
In a Nov. 18 presentation, Steve Markenson, FMI VP of research and insights; Rick Stein, FMI VP of fresh foods; and Ricky Volpe, professor of agribusiness at Cal Poly, presented some key findings from the holiday report, along with insights from FMI’s ninth annual Power of Foodservice at Retail report.
Budget-conscious shoppers
“Despite the high level of concern among shoppers about food prices, shoppers are feeling pretty confident in managing and being in control of their grocery budgets this holiday season,” Markenson said.
About 67 percent of shoppers expressed concern about grocery prices, along with the prices of gas and housing, and concerns about holiday gifts. However, grocery shoppers are finding ways to stay within their budgets and feel “much more in control of what they are buying,” Markenson said.
This is evident through strategic spending, where shoppers are prioritizing special meals and holiday essentials by focusing on deals, store brands and meal planning.
“We found around 85 percent of shoppers report feeling they have at least some control over grocery expenses, but the concern about their ability to pay for groceries and other things is still there for many,” Markenson said.
He noted the average weekly spend of $158 per average household for groceries has remained consistent over the last 21 months. Even with this relatively stable level, nearly 70 percent of shoppers said they feel as if they’re spending more on groceries.
“This perception certainly stems from the combination of the food inflation we particularly experienced back in 2022 and a lot of the election-year rhetoric when it comes to food prices,” said Markenson, while noting that food inflation “has been very much under control” for the past 18-20 months.
Volpe agreed, adding that the U.S. is on track for below-average food price inflation in 2024, relative to historical norms.
While meat and egg prices remain challenging, he said fruit and vegetable prices are down, cereal and bakery products are “looking good” and there is some relief in the dairy category.
“It is still a little bit of a mixed bag. But on average, consumers who are willing to make substitutions and shop carefully and look to see where food prices are moderating have the opportunity to save money, especially with respect to recent years,” Volpe said.
He also pointed out that, for the first time in about two years, the Consumer Price Index and Producer Price Index are “behaving normally,” with the PPI indices outpacing the CPIs a little bit.
“That’s the normal process of things,” Volpe said. “We should be seeing these PPIs cooling off and coming down and moving in tandem with these CPIs.”
He also noted that wages in the grocery industry are the one major cost source where retailers are dealing with an inflationary pressure that is “easily outpacing other costs and their own prices.”
Since the start of 2023, nationwide, average grocery store wages are up more than 5.5 percent while grocery prices are up just 2 percent.
Holiday expectations
Despite feeling some anxiety, shoppers are maintaining a strong sense of excitement and enthusiasm for the holiday season, according to Markenson.
“We found that 73 percent of shoppers report feeling either very or somewhat excited about the holidays, with Thanksgiving at 84 percent and the December holidays at 88 percent,” he said.
When asked what defines a successful holiday for Americans, nearly 60 percent of shoppers said they enjoy a “fun and harmonious time with family and friends,” with an emphasis on togetherness, creating a great homemade feast and giving meaningful gifts, Markenson added.
Supply chain concerns
Nearly 40 percent of shoppers, especially households with children, are worried about potential shortages of key ingredients. However, Volpe said he believes the food supply chain is more resilient than it was during the COVID-19 pandemic and widespread shortages are unlikely.
He noted that a silver lining of the pandemic was that it brought to light some of the issues facing the supply chain in terms of rigidity of sourcing, challenges related to truck transportation, congestion at the ports and labor shortages.
“I think the food supply chain is doing some really great work as we speak on shoring up and building resiliency with respect to these challenges,” he said.
Markenson added that, from a consumer perspective, shoppers are willing to be adaptable if faced with potential shortages. Nearly half of those surveyed said they would be willing to prepare a familiar alternate dish if preferred ingredients were not available, while 30 percent said they would be open to trying a new recipe. A small percentage said they would be willing to turn to fresh, prepared food as a backup.
“This response aligns very well with the findings from our next report on the role of food retailers’ foodservice and prepared food offerings,” he said.
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Foodservice at retail growth
Markenson said fresh and deli-prepared foods from food retailers are a cost-effective, time-saving meal solution especially valuable for consumers during the busy holiday season.
This segment continues to grow and perform very strongly, he noted.
FMI’s Power of Foodservice at Retail survey offers insights from shoppers on foodservice at the grocery store, an area that retailers are continuing to focus on.
Stein shared that foodservice at retail sales are increasing by 1.2 percent, to about $18.7 billion, which speaks to “the rising consumer demand for fresh, ready-to-eat options that save time and effort.”
Categories such as pizza and fully-cooked meats have shown robust year-over-year growth, he said.
FMI data on consumer purchasing behavior supports this trend, underscoring the importance of prepared foods in meeting consumer needs for quick, affordable and satisfying meal solutions. Stein said this is particularly true heading into the holiday season, when convenience is key.
Evolving consumer preferences
Consumers are seeking nutritious, convenient and affordable meal options, often using a hybriapproach that combines scratch cooking with prepared foods. Evolving work patterns, health interests and the need for convenience are shaping purchasing habits.
Stein noted that the shift to hybrid work has had a direct impact on meal choices, with more people turning to retail foodservice for lunch and dinner.
“While nearly two thirds of shoppers say they prioritize nutritious choices when buying prepared foods, only 26 percent were very satisfied with the options currently available. This gap represents an opportunity for retailers to meet a clear demand for more nutritious options,” Stein said.
These opportunities include providing additional meal planning support and introducing options such as grab-and-go breakfast items.
He noted that the foodservice value equation is crucial.
“Retailers have an opportunity to emphasize this value in their communications, helping shoppers understand that grocery prepared foods are an affordable alternative to dining out,” he said.
Offering online menus, the ability to order ahead and pick-up options also are opportunities for retailers, along with marketing efforts to raise awareness of their foodservice options.
“Embracing these strategies can improve convenience and encourage more frequent purchases from the deli prepared section,” Stein said.
