When it comes to having a pulse on today's ever-changing consumer, 84.51°, the retail data science, insights and media company informing shopper experience at The Kroger Co., knows what its shoppers want.
84.51° conducts monthly surveys of 400 Kroger shoppers who have shopped a Kroger banner in the last three months.
It's intended to provide an ongoing pulse on what customers are doing, their motivations and their anxieties, as well as what they're looking forward to and thinking about most, said Barbara Connors, vice president, strategy and acceleration, for 84.51°, which recently released its 2023 Year in Review special report.
To learn more about the latest shifts in shopper behavior, trends for the year ahead and where the conscious consumer fits into the evolving retail landscape, The Packer recently sat down with Connors for a conversation over Zoom.
Editor's note: The following has been edited for length and clarity.
The Packer: Based on 84.51°'s 2023 Year in Review special report, it seems 2023 was a year of stretching budgets in the face of rising food costs. As inflationary pressures ease somewhat, what consumer behaviors do you anticipate will define 2024?
Barbara Connors
Connors: When we look at the areas of the store where there's high awareness and customer concern about rising prices, there are three categories in which more than 75% of customers have noticed prices going up, and that is dairy, meat-deli-fish, and produce. But it is in produce, in particular, where 76% of customers have really noticed that prices have gone up.
And the additional piece, which is sort of macro to the grocery space, but I think definitely still plays in fresh produce, is the top behavior that customers are partaking in to stretch their overall food budget is ordering less takeout, eating out less and buying more from stores, which certainly helps the whole store, but also very much helps fresh produce because consumers are buying the ingredients to cook and eat at home.
The trend in the past year towards increased demand for grocery trips and consuming and cooking food at home has continued.
The report also revealed a dichotomy in purchasing behavior, where consumers are clearly penny pinching but are also still willing to invest in products that they're passionate about or simply prefer. How might this relate to the purchasing behavior of the conscious consumer?
Among the top two types of shoppers, there's the shopper who is looking for prices and deals and there's the shopper who's focused on quality.
What's interesting is when you look [at shopper behavior] across different categories, with things like snacks and candy and drinks, the top consumer behavior is to look for deals and promotions. But in fresh, the top behavior is to look for quality and freshness.
It very much speaks to this dichotomy of customers because in a fresh department, quality and freshness are the most important thing, and fresh is also a driver of bringing customers into physical stores.
The No. 1 reason customers still want to shop in-store versus using e-commerce is because they don't trust someone else to pick out their products.
It sounds like fresh will continue to be a point of differentiation for grocers and continue to be an opportunity to engage the conscious consumer, who among other attributes, cares about quality and freshness.
Yes, it's worth its weight in Kroger's tagline “Fresh for Everyone.” Fresh is at the forefront because fresh is so important in determining where you shop.
We still see fresh and, produce specifically, driving shopper traffic to one store versus another. And yes, we see fresh as a dominant driver in determining where someone decides to shop.
While we haven't yet seen sustainability make its way into the masses yet, it's still very important to a subset of consumers.
We've actually found that with shoppers today what is more common is thinking about how they can make smart conscious decisions around all of the factors surrounding the products they buy — so, reducing plastic bags and another big one, reducing food waste.
We've really seen [reducing] food waste as a top behavior or factor. Reducing food waste has hit in two different ways over the past year because on the one hand, it helps you make better decisions for a better impact on the planet.
On the other, it is a fiscally responsible decision. It's a way to stretch your dollars by consuming everything you've bought, but you can also feel good about the decisions you're making because of the halo effect it has on your community and the environment.
How are consumer priorities changing in the grocery space?
When we asked shoppers about innovation and what they're looking for, their responses are indicative of changes in how people define health benefits and health priorities.
In innovation, the top two important benefits that customers are seeking are functional benefits of the food they're buying and clean ingredients.
I think that clean ingredients is really indicative of this shift. There's a desire to better understand what it is that you're putting in your body.
Customers want to look at a package and know what exactly is in it.
There has also been a shift towards health being defined by overall wellness and not just a diet. It's an evolution from priorities being fewer calories or lower fat to what are the functional benefits and how clean are the ingredients?
Do you see that way of thinking continuing in 2024?
I do, and not only in 2024. We're seeing a difference across generations. When we look at the functional or health benefits that customers are seeking across different age groups, it is interesting that older shoppers are the ones that are still more likely to focus on weight management and heart health and younger shoppers are more likely to focus on gut health and sleep.
We will continue to see that evolution progress beyond calorie counting and diets to a more holistic and long-term view of health.
Were there any other takeaways that jumped out to you in the report?
When we think about impulse and the categories that customers are likely to engage with for impulse purchasing — items they put in their baskets that they were not planning on buying ahead of the trip — now it's not just things like snacks, candy and ice cream, but we also see top impulse purchases in fresh bakery and produce.
While produce is a really important item on the list that drives where customers decide to shop, it is also now a category that is impulsive and is fun to shop when you're in the store.
How is Kroger making produce fun?
When we ask shoppers what's most important when you're treating yourself in food, the No. 1 response is taste. And as preferences evolve and people are focused more on longevity and healthful living, they also increasingly embrace that it tastes really good.
It isn't just about eating your fruits and vegetables for the vitamins they provide; it is also a delicious treat.
We also think there's a macroeconomic factor playing into this as well. As customers are shopping more in store versus eating out there's a desire to change up the routine and try new things. Customers are looking in-store for new ingredients that they can add into meals and snacks, and produce can be a great place to try new tastes and flavors.
There's this shift of produce being just an accepted snack now.
There's been so much innovation in fresh produce around snacking. Is part of the fun making fresh produce as appealing as a bag of chips?
Yes, I think that's very true. Last year, a third of customers said they were planning on purchasing fruits and vegetables for their Super Bowl celebrations.
How does Kroger use the 84.51° data and insights to inform planning, merchandising and product selection?
We use it in a host of ways. Everything we do is centered on the customer.
And what has become very apparent in the last four years is that things are changing so rapidly and there are new stresses and shifts that come up which impact customer behavior. You can no longer rely on customer intelligence that comes out quarterly or annually and use that to drive your strategy.
You have to keep a real time pulse on what is important so that you can identify when shifts happen, when new behaviors start to pick up and when they move from being sort of on the fringe and into the mainstream, so that as you're building out your longer-term strategies, you know when you need to deviate from them and when you need to pivot.
Any additional insights to share about consumer behavior heading into '24?
The last thing I'd say is, as we looked at the end of the year and asked Kroger customers: What are you optimistic about and what are you less optimistic about? In 2023, the big macro themes were around stretching budgets. Consumers were less optimistic about macroeconomic factors that are outside of us.
What has been interesting for this year is that where customers are most optimistic is around any aspects in their personal life that they can control — so, jobs, relationships, personal health.
I think a major theme that we'll see going into '24 is this blend of resilience and control — a leaning into the aspects of your life that you can directly impact.
The big insight that we saw coming out of the year in review is that despite the many negative things out there, there's also a lot of reason for optimism.