Research by McKinsey highlights key forces driving market changes in the next year. After surveying 4,500 CE consumers, interviewing regional retail and CPG leaders, and merging insights with additional research, a remarkable transformation in the grocery sector emerges. This shift may alter the way consumers shop, the way grocers build their value propositions, and the way manufacturers build their brands.
Consumers prioritize budget-friendly options to ease financial strain, leading to reduced loyalty to brands and grocers when enticed by better prices. That is why the report states that it is “time to battle for a new shopper”. The primary insights revolve around four key trends: a focus on grocery affordability, crafting value propositions for budget-constrained yet discerning shoppers, the growing significance of Generation Z as a new consumer force, and the margin squeeze faced by retailers and CPG manufacturers.
Based on the survey, 54 percent of CE consumers intend to increase shopping at budget-friendly retailers to save money in 2023 and beyond. Consumers are also planning to save by favoring private label brands (53 percent), selecting lower-priced options (51 percent), and reducing overall grocery volume (48 percent). Additionally, 58 percent of retail shoppers in Central Europe are stocking up on products when they find attractive prices.
The recommendations of the researchers for Grocers and CPGs is that they should build advantage with private label, drive consumers acquisition and loyalty, twist consumer Experience in online and prioritize cost excellence.