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Jan 04, 2024

What grocery execs are saying about inflation and consumer behavior

During their most recent earnings calls, leaders at Kroger, Ahold Delhaize and

During their most recent earnings calls, leaders at Kroger, Ahold Delhaize and other companies discussed shoppers’ price concerns and how inflation is moderating unevenly across categories.

As they review their companies’ results in 2022, grocery executives have been looking back on a year defined by relentless price increases, evolving consumer behavior and questions about how historic shifts unleashed by the pandemic will affect the industry's performance as the economy plods ahead.

Last year's unprecedented inflation posed an especially tough challenge for grocers last year, painting supermarkets as villains in the eyes of frustrated shoppers even as store operators scrambled to hold down food prices. Rising costs on nearly all fronts kept retailers off balance as they navigated during what Target CEO Brian Cornell described last month as "a rapid escalation to the most expensive operating environment we've seen in decades."

As they look ahead to the rest of 2023, executives see inflation moderating, but not at a consistent rate across categories. They’re also concerned about shoppers’ ongoing price sensitivity and employing various tactics — like turning up the volume on private label merchandising — to keep them shopping in their stores.

Here's a sampling of what top officials of several publicly traded supermarket companies told investors during recent earnings calls about the near-constant uncertainty they faced last year and their predictions for the rest of 2023.

Grocers are coalescing around a sense that the pace of price increases will slow considerably as 2023 progresses, bringing long-awaited relief to consumers and retailers alike. But a reduction in inflation is also likely to come with downsides for retailers, executives said.

Grocers have rolled out a number of discounts and promotions to keep people coming back to their stores as conditions have changed, but shoppers’ buying habits and loyalties have evolved — and those changes could be around for a long time.

Inflation has caused shoppers to cut back on the amount of products they purchase per trip, posing another challenge for retailers.