Consumers are more concerned about inflation than COVID-19 these days, according to the monthly primary shopper survey series by IRI in partnership with Anne-Marie Roerink, president of 210 Analytics.
“In January, 38% of the population were extremely concerned over COVID-19, which was down sharply from 66% in April 2020,” Jonna Parker, team lead for IRI Fresh, said in a news release. “Shoppers are very aware of food inflation (89%) and the vast majority (95%) worry about it.
“In total, 42% of shoppers are extremely concerned about the price increases they are seeing across the store — which means food inflation has more people on high alert than COVID-19 as of January 2022,” Parker said.
Like the inflated prices of products overall, fresh produce prices are also higher than last year.
The combined effect of concerns over COVID-19, inflation and supply chain challenges explains why shopper demand remains in flux as we enter the third pandemic year, Roerink said. In 2022, IRI, 210 Analytics and the International Fresh Produce Association continue to team up to document the dynamic marketplace's impact on fresh produce sales.
The January survey showed several in-depth findings about fresh produce sales, volume, prices and shopper behavior.
In January 2022, the price per pound for total fresh produce increased by 9.0% over January 2021. The latest 52-week look is milder, at 7.1% increase, given the much milder inflation in the second quarter of 2021. Vegetable inflation is far below average, but fruit prices increased by nearly 14%.
“Consumers are aware and concerned about the inflation they are seeing,” Joe Watson, vice president of retail, foodservice and wholesale for the IFPA, said in the release. “And as a volume-driven business, the industry is concerned, as well, and doing everything in its power to get adequate supply to the stores and keeping prices down.”
The consumer price index increased 7.5% for the 12 months ending January 2022, the highest increase in 40 years, according to the Bureau of Labor Statistics.
IRI-measured price per unit for all food and beverages in multioutlet stores, including supermarkets, club, mass, supercenter, drug, military and other retail food stores, also shows that prices continued to rise over and above their elevated 2020 and 2021 levels.
Perishables, including produce, seafood, meat, bakery and deli, had the highest year-over-year sales growth in 2021, at +6.2% out of all food and beverages. However, fresh produce sales gains were below average, at +4.4%. Frozen foods had the highest increase versus 2020, at +26.0%.
From a dollar sales perspective, January 2022 was another great month for fresh produce, surpassing the records set in 2020 and 2021.
However, dollar gains were inflation-boosted while units and volume sales declined year on year.
“The risk in the current levels of inflation is volume pressure,” Watson said in the release. “At the same time, it is hard to measure the effect of supply chain disruption, several winter storms affecting the Northeast and the impact of frozen and canned purchases on fresh produce sales. In all, January 2022 sales still tracked ahead of January 2020, which was not yet affected by the pandemic purchase patterns.”
Each of the five January weeks generated $1.3 billion or more for the fresh produce department, with the week ending January 16 being the biggest, at $1.43 billion. While year-on-year dollar sales were higher each week, volume sales were down. Year-on-year decreases varied from -1.7% the week ending January 16th to -6.2% the first week of the year.
“Our monthly shopper surveys are finding that consumers are hyperaware of inflation and are trying to mitigate the increases as much as possible,” Parker said in the release. “And that is exactly what we are seeing in recent trip baskets. On average, people are spending roughly the same amount of money per trip, but they have many fewer items in their baskets.
“Saving by buying less is typically one of the later money-saving measures during periods of high inflation, but with the lack of promotions and already cooking a lot more at home, consumers are drawing on the lessons they learned and fine-turned during the Great Recession,” she said. “For many, that means buying less quantity and we are seeing that very clearly in fresh produce.”
January 2022 gains were down from the fourth quarter growth numbers across the board. Year on year, vegetables dropped into the negative.
Despite above-average inflation for fresh produce, its share of dollars remained below average in January 2022. Shelf-stable fruits had a very strong January, with year-on-year sales gains of 7.5%. Both frozen and shelf-stable are heavily impacted by supply chain disruptions and assortment, and inventory levels have been down significantly over recent months.
Fresh fruit sales in January
“On the fruit side, all top 10 sellers gained versus a year ago with the exception of bananas,” Parker said in the release.
In a change from 2021's reporting methods, this year's reports will show the increase in dollars and the increase in volume versus a year ago.
“The difference between the two percentages is a close match for inflation on a per-pound basis, though lower promotional levels also play into higher dollar gains,” she said.
For instance, while January 2022 avocado dollar sales were up 13.3%, pound sales were down 12.4%, which would translate into inflation of about 26% on a per-pound basis, Parker said. In looking at the actual numbers, the average price per pound for avocados in January 2022 was up 29.4% versus a year ago, while promotional levels were down by 15.4%.
“This new reporting will help provide a better look at the effects of inflation, plus less promoting, on the dollar performance,” she said.
Fresh vegetables sales in January
“The top 10 sellers on the vegetable side had a mixed performance in terms of dollar sales growth but has been very consistent in makeup,” Watson said in the release. “Tomatoes, potatoes and packaged salads have been the top three sellers for many months running. The importance of salads is further underscored by lettuce sales, in fourth place.”
Carrots had the strongest volume growth performance, pulling even with year-ago levels.
What's next?
The marketplace disruption caused by inflation, supply chain challenges and COVID-19 is not showing signs of letting up any time soon, the report shows.
Shoppers are reacting several ways:
- At 82.4%, the at-home share of all meals reached its highest level in a year, which favors spending at food retail;
- At the same time, the inflationary levels in retail have two-thirds of shoppers looking for one or more money-saving measures. Inflation will likely continue to drive dollar gains for most categories in the foreseeable future but is pressuring unit and volume sales;
- For the first time since the onset of the pandemic, a greater share of shoppers (29%) feel their financial situation a year from now will be worse versus better (23%). About half, 48%, think it will be unchanged. This outlook may prompt a greater focus on money-saving measures beyond the current marketplace behaviors alone; and
- Continued rising inflation and shortages are driving stock-up behaviors among 42% of shoppers. While 58% do not buy more than they need, 14% stocked up on one or more items out of concerns for continued price increases and 19% stocked up out of fear that the item will be out of stock next time.