The Friday Checkout is a weekly column providing more insight on the news, rounding up the announcements you may have missed and sharing what’s to come.
After months of bearing consumer frustration over the gaping holes inflation has eaten into their budgets, food retailers are aggressively looking to reframe the narrative. But could their growing efforts to position themselves as allies in the fight against high prices put the squeeze on the industry’s finances instead?
Thursday’s announcement by Aldi that the deep discounter is “slashing prices across its aisles” as summer approaches is a clear sign that discounters are looking to press their low-price advantages with shoppers. It also underscores the urgency grocers feel in dismantling the notion among many shoppers that they have been responsible for pushing costs up — and maybe even benefiting from them.
The fast-growing German supermarket chain has been hobbled in its efforts to hold the line on prices across many categories by high supplier costs, particularly for packaged goods, but is finally ready to press ahead with a campaign to reduce bills for shoppers, Bloomberg reported.
Wegmans — a chain more associated with a premium shopping experience than with rock-bottom prices — has also seized the moment to show it feels shoppers’ pain at the register. “We are committed to offering you the best prices on the items families use most,” proclaims a large sign in one of its locations in suburban Washington, D.C. In addition, labels on shelves in the store draw shoppers to specific items that have the “best price” in their category.
Kroger is also looking to draw attention to the moves it is making to help people save money. The mega-chain declared Monday that it is offering “sizzling savings” on Memorial Day staples like hamburgers, potato chips and cole slaw. The announcement follows Kroger’s promotion earlier in May of sharp discounts on the ingredients for a Mother’s Day brunch.
Survey data released this week by The Harris Poll and Axios points to the heavy importance people are placing on price when sizing up retailers.
Several mainstream grocery chains, including H-E-B, Publix and Wegmans, fell off the 2023 edition of the Axios Harris Poll 100, an annual ranking that reflects people’s opinions about brands seen as most visible. Kroger remained on the list, but fell two positions, while Aldi, Dollar General and Family Dollar, all of which are hyper-focused on value, grabbed spots after missing out in 2022.
Retailers are pushing CPGs to reduce costs as they look to bring prices down for shoppers without depleting their own pocketbooks. Speaking with Wall Street analysts last week, Walmart President and CEO Doug McMillon said the mass retailer is working with producers to cut costs, adding that doing so would benefit CPGs by increasing sales volume.
But while Walmart has the might to force suppliers’ hands, finding ways to cut prices for shoppers without crimping their own bottom lines could be more challenging for smaller retailers.
“Walmart has much more bargaining power over its suppliers than its suppliers have with Walmart. If price negotiations turn ugly, Walmart can always allocate more shelf space to another supplier,” Arun Sundaram, a senior equity research analyst for CFRA Research, wrote in a research note this week, adding that the pressure the retailer is exerting could push down the fortunes of CPGs with little choice but to bend to its will.
In case you missed it
Grocery-branded road snacks
For Memorial Day weekend, Stop & Shop is giving away free “CarCuterie” boards to people who stop at the Cape Cod Canal Region Visitors Center in Sagamore Beach, Massachusetts.
The Ahold Delhaize banner is looking to grab the attention of travelers on the way to Cape Cod, Massachusetts, with the car-friendly treats that the grocer says will fit in a car’s center cup holder.
Each CarCuterie includes a variety of meats, cheeses and accompaniments, such as salami, pepperoni, three-pepper colby jack cheese, horseradish pickle chips, baguettes and cranberry bread, dried cranberries and seltzer waters. The products include a mix of local offerings, private brands and name brands.
COVID-19 precautions fall
The plexiglass barriers that many grocers installed at their checkout stations at the start of the pandemic are disappearing.
H-E-B is the latest grocer to announce plans to take down its plexiglass barriers from stores, MySanAntonio.com reported earlier this week.
The grocer said it made the decision after getting input from store employees, noting that it aligns with the federal government ending the COVID-19 emergency declaration and guidance earlier this month,the news site said.
SNAP consumer spending falls
Amid high food prices and the end of emergency SNAP allotments, SNAP shoppers are a top-of-mind consumer demographic for grocers. A new report from Numerator has found that SNAP consumers are reducing their spending in snack and seafood units at a faster clip than non-SNAP consumers.
“This is attributed to the fact that these more discretionary categories are usually the first to see the effects of budget cutbacks,” Numerator said.
Meanwhile, store brands are seeing increasing unit share among SNAP consumers, with Walmart’s Great Value, Aldi’s brands and Costco’s Kirkland among the top brands seeing growth, the report noted.
Number of the week: $740 million
That’s the total of Instacart’s ad revenue last year, a 30% increase from 2021, according to a recent report from The Information. Nearly 30% of the company’s 2022 revenue stems from selling advertising rather than delivering groceries, the report noted.
What’s ahead
Newest jobs report
The U.S. Bureau of Labor Statistics is scheduled to release its latest employment report next Friday. The data will give insights into the grocery industry’s workforce as companies continue to face labor challenges.
Parade of earnings
Both Dollar General and SpartanNash will host earnings calls on Thursday to discuss their first-quarter performance in 2023.
Impulse Find
Lemons are suddenly flying off of grocers’ shelves — at least when Xavier Mortimer enters the store.
The French magician paid a visit to La Tapatia Market, grabbed a seemingly ordinary lemon from the produce stand, placed it into a simple plastic produce bag and then set it loose. A couple in the video watches in awe as the lemon floats, spins and dances right above Mortimer’s hand before he lets it zip around the produce section. The magician then tames the lemon, placing it in a glass jar where it continues to flop around before transferring it into a grocery basket and exiting.
Imagine the lemonade you could make with those lemons.
