How Grocery Retailers and Brands Can Anticipate and Address Consumer Behavior Changes in 2025

By Sally Lyons Wyatt, Global EVP & Chief Advisor, Consumer Goods & Foodservice Insights

Consumers have always modified their shopping habits in response to economic challenges. In the past five years, though, they’ve flipped the script, responding to compounded price growth, year over year, since 2019. There are signs inflation is easing – but even so, consumers face grocery prices 27% higher, or more, than they were before the pandemic. 

These forces have fundamentally changed how consumers define value, creating what we call “unscripted consumers.” These are people who don’t follow the usual spending patterns we’ve seen in other periods when growth has slowed. Since 2019, many grocery retailers have benefited from topline growth, but it has slowed. And while volume has returned in some channels and categories, others are still waiting. To recapture unscripted consumers and drive growth, retailers and brands first need to understand new consumer behaviors and implement several tactics aimed at meeting their evolving needs.

Four ways consumers have changed their spending habits 

What differentiates today’s unscripted consumers from consumers in previous periods of slow growth is their pursuit of “pervasive value,” or a value that goes beyond price. Value can equate to time savings, quality, convenience, a type of indulgence, or other measures. The ways consumers seek value also differs now. Instead of engaging in one or two of the following behaviors, consumers may pursue several or all of them, including: 

• Quicker, more frequent trips. All grocery trip types are growing. Quick trips (+8.9%) lead growth, but with fewer items (-11%) purchased per trip compared to a year ago. These trips include purchasing 2.1% more items from the perimeter, such as deli-prepared and heat-and-eat meals, and fewer center-of-store products. It’s important to note that the majority of sales come through stock-up trips. 
• Cutting back on foodservice. Foodservice traffic is down (-2% year over year through Q2 2024), but it’s resulted in retail gains (+0.85%) versus a year ago, as consumers prepare more meals at home.
• Trading to private label and premium brands. Consumers’ shifting value definition has caused a decline in mainstream CPG brands and growth in private label (+3%), premium (+2%), and super premium brands (+4%), compared to a year ago. This shift squeezes mainstream brands in the middle.
• Switching channels. Consumers are shifting to value channels, which account for most trading-down behaviors. Mass and club channels continue to drive most food and beverage growth.
  • E-commerce for food and beverage, driven by store delivery, is growing. The convenience channel is declining.

Three strategies for combating inflation-based spending

Because these shopping trends are likely to persist well into 2025, retailers and brands need to dig deep to understand their consumers and change some of their tactics to recapture growth. Here are three focus areas to consider:

• Highlighting unique attributes. When consumers plan their purchases, they often look for products that offer more benefits than their primary purpose. Beverages, for example, offer more than just hydration – they can provide protein, vitamins, probiotics, an energy boost, and more. Whether they’re looking for other attributes like this because of their dietary or life stage needs, or just personal preference, retailers and brands can help communicate new and different attributes through digital ads, social media, shelf communications, and mobile apps. 
• Use assortment strategy to provide more options and tiers. It’s still essential for retailers to understand their customer base. For example:
  • Eating habits. For example, the uptick in use of GLP-1 medications means more consumers seek smaller or single-serving snack sizes. 
  • Demographics. Hispanic consumers shopping for intergenerational households may look for bulk products.
  • Flavor. Consumers find joy in new flavors – having a core selection, along with surprising and delightful new combinations, can drive purchases. 
  • Tiered options. Retailers should aim to sell a variety of products at different price points to cater to shoppers at different income brackets. 
• Engage consumers with targeted messaging. Reaching consumers with the right message at the right time is more important than ever. Retailers and brands can engage consumers throughout the day and the year and across occasions and dayparts. Morning, midday, snacking, birthdays, and holidays offer unique engagement moments – tailoring messages to these specific occasions can enhance consumer connection and drive engagement.

Inflation has forced consumers to make deliberate, value-driven decisions about where, when, and how to shop, and this is likely to continue in the near term. They are also focused on making more informed decisions when it comes to determining value, and that’s one behavior that’s sure to stick. Understanding more about your audience and ensuring your portfolio can meet their needs today and over the next few years can help you boost growth.

Do you have any questions for Circana? Get in touch with us at GrowthInsights@circana.com