The latest dunnhumby Consumer Trends Tracker (CTT) is out, reporting that "Americans believe that grocery retailers are earning a 35.2% net profit margin, 14 times higher than grocers’ actual net profit margin average of 2.5%, and that food-at-home inflation is 24.3%, double the annual rate reported by the U.S. Bureau of Labor Statistics."
The reports' findings include:
• "In the third wave of the CTT, dunnhumby also found that despite perceived inflation reaching a new high, customers are coping a little better compared to the last wave of the report. Consumers who reported they would have difficulty covering an unexpected expense of $400 dropped from 64% in July to 60% in November 2022. In addition, 48% of consumers reported they are getting the kind of food they want to eat compared to 43% in the second wave."
• "Inflation worries are driving customer sentiment. When consumers were asked as part of the survey, why customer sentiment is the lowest it has been in 50 years, consumers responded by a five to one margin that inflation was the cause, with covid coming in a distant second. When asked about 2023, only 22% of respondents predicted inflation and the state of the country will get better. Forty-seven percent of respondents predicted inflation and the state of the country would improve three years from now. Over a five-year period, 54% of consumer are optimistic that their own finances and the state of the country will improve."
• "Younger shoppers are most optimistic, but only in the short term. For 2023, 31% of consumers aged 18-34, believe their finances and the state of the country will get better, compared to just 13% of consumers over 65. Over a three and five-year timeframe however, there were no significant differences by age."
• "While improving slightly, most consumers continue to struggle financially. No state is immune, but the states with the highest rate of financial insecurity (75%) are Oregon, Oklahoma, Louisiana, and West Virginia. The states with the lowest rates of financial insecurity (45%) are Minnesota, Wisconsin, Maryland, and Delaware."
In addition, the report says, "Forty-four percent of consumers reported it was very or extremely important for retailers to help them make healthy choices, an increase of 3% from the previous wave. In addition, 48% reported they choose healthy foods while shopping (up 2%), 40% read diet and nutrition information (up 2%) and 29% are buying products for a specific diet when they shop. The top five diets in the U.S. cited in the survey are 1) Keto, 20 Low carb, 3) Low sugar, 4) Vegetarian, and 5) Gluten free."
- KC's View:
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For the record, the "woefully" in the headline was my word, not dunnhumby's. But I'll stand by it.
But … if consumers are misinformed about margins, that is at least in part because retailers have done a lousy job of explaining their business model to shoppers. I'm not sure how granular retailers need to get, but I think there have to be ways to talk about the differences between gross and net profits in a way that fosters shopper loyalty.
That said, there are a lot of people in this country who are misinformed about a lot of things - that's clear from their belief that inflation is a lot higher than it actually is. Sure, some of this has to do with mindset, but an over-dependence on social media for news, combined with the precipitous decline in local newspaper readership, means that people just don't know stuff.
One of the best things about my job is that every morning, I scan dozens of newspaper sites. I read not just news that I can use on MNB, but dozens of other stories that grab my attention and spark my curiosity. I'm not the best informed person on the planet by any means - I've described my knowledge base as wider than it is deep - but I get a lot of news from a lot of different sources, and very little of it is from social media.
