Grocery shoppers are seeking value and convenience at these outlets ….

The food channel is not growing as quickly as online, dollar and club channels.

That’s according to a new report by IRI (recently merged with the The NPD Group), which found that at the end of January 2023, online grew 16%, the dollar channel grew 14% and the club channel increased by 12% versus a year ago.

Comparatively, the food channel only grew by 7%.

Value shopping behaviors will continue to define 2023, the study said.

The report leverages IRI’s latest point-of-sale data, which reveals that at-home food and beverage inflation was up 13.2% in the fourth quarter of 2022  versus the year-ago period. While consumption levels are continuing to soften, at-home food spend remains strong, with center store sales up 11.1% and perimeter sales up 6.3% in the fourth quarter of last year.

Highlights insights from the IRI Impact of Inflation on Consumer Behavior  include the following.

• Private label and promotions are on the rise, while premium purchases are on the decline.
  • Many consumers are shifting to private label brands due to the impact of inflation, with private label gaining share of category in 75% of all food and beverage categories seeing growth within private label.
  • Premium growth is slowing down as trading down behavior increases, with premium food and beverage brands losing 0.6 share points for the 12 weeks ending Nov. 27, 2022. But pockets of growth remain for premium products, including beverage alcohol and energy drinks.
• Food and beverage dollar sales growth will moderate in 2023, as a result of easing inflation and price stability, increasing price elasticity and increased at-home consumption.
  • Inflation is expected to remain relatively high versus historical standards. Despite trade downtrends, consumers will look for premium experiences at home, innovation and better-for-you products that offer taste and convenience.
• Price inflation across the store varies widely.
  • Inflation in the alcohol category was up 5.4% in the fourth quarter of 2022 versus the year-ago period, while fresh meat and seafood were up 3.4%. Bakery and dairy experienced larger increases, up 18% and 23.2%, respectively.  Center store inflation remains elevated at 15.3%, while inflation is coming down in the perimeter departments (7.5%).

“The CPG space has proven to be less volatile and more resilient during economic downturns than other sectors,” said Alastair Steel, executive, Client Engagement, IRI. “However, shoppers are feeling the impact of high prices and are shying away from discretionary purchases. Multiple tactics are being used to reduce spend and manage budgets, with value channels performing well.”

The details of these and other findings are included in IRI's Impact of Inflation on Consumer Behavior, published here.