here to discuss more. Emily McQuinn food and beverage
analyst for decision intelligence company Morning consult Kroger saw sales
top expectations. The company is raising its full year
guidance as we mentioned. So what's your take on
Kroger's results here? Yeah, I think this is
something that is a reflection of the changing shopping patterns
we're seeing, we have been asking consumers if they're
making changes to the way that they eat and drink
as a result of inflation. And one of the
top things that people say they're changing is eating out
at restaurants less. So clearly that's sort of in
Kroger's favor in the favor of other players in the
grocery category. I'm glad that you mentioned some of
consumer habits. But how have these shopping habits really
changed for discount chains since the last quarter we've been
checking in with consumers regularly on, you know how
those shopping patterns are changing and of course in this
category it's extremely concerning to see the prices continue to
go up for consumers so they are making adjustments and
thinking about your point which retailer is going to get
their dollars. And sometimes that means shifting to discount
retailer. Sometimes it means purchasing fewer groceries overall.
Sometimes it means purchasing different brands or products, especially
store brands or generic private label brands to save dollars
. And I think we'll continue to see, you
know, those sort of shifts happening for consumer shopping
patterns? Yeah, definitely. An inflation is at
the wholesale level and shows food prices climbing 1% higher
in july, that's the fastest increase in four months
. Do you think there's concern that rising prices could
cut into the profits of grocery store chains like Kroger
and walmart? And I will point out walmart being
one of those situations where they did do their best
to not pass on some of these inflationary changes to
their consumers, instead offloading them on suppliers. In
many cases it's a tricky line to walk for retailers
, you know, they want to keep those shoppers
coming to their store as opposed to one of their
competitors, and one of the ways to do that
is potentially to keep those costs low. Um but
at the same time they are then, you know
, potentially taking a hit in terms of the increased
input costs that they're dealing with. So it's a
really tricky balance to try to figure out, you
know, the prices that will keep consumers coming through
the door, but then also making sure that they're
hitting the profit that they need to and profits are
notoriously tight in this sector. In grocery in general
, it's um you know, high frequency of purchases
, but relatively low margins and low dollar ring.
So it is tough to balance that for retailers.
It's also an interesting time, especially because we know
, consumer habits aren't fast and steady across all industries
is one of the biggest seasons we've seen for revenge
travel. So people are willing to spend money,
they're willing to splurge? Sometimes going for dining out
instead of shopping in the grocery store for their food
needs? Do you anticipate the prices will be coming
down in the next few months because of a number
of any of these factors, or just the fact
that maybe people will start to pull back when it
comes to their budgets, you know, the decrease
in demand could certainly help to bring those prices down
a bit. Um I think the manufacturers in this
category are still dealing with a lot of volatility and
their input costs, whether that is through increased ingredients
, packaging, gas, labor, you know,
there's so many factors in the supply chain here that
are impacting their costs and some of that is still
trickling through the supply chain in the system. So
I think we'd all like to see looking forward to
that C. P. I next week to see
, you know, at least less of an increase
month over month in this sector in particular, it's
the second highest category for most consumers in terms of
what they spend their money on right after housing.
So, you know, any any decrease there would
be very welcome. Absolutely. Emily. Before we
let you go anyways, that shoppers can offset the
rising cost of groceries right now. You know,
I always think about being sort of plan fel in
terms of your shopping trip, making sure that you're
thinking about the foods that you need for each meal
and snack of the day so that what you're buying
is getting used, You're not buying extra items that
either will go to waste or you know, you
didn't need to spend money on maybe this week it
could have waited till next week. So some of
that advanced planning, it's not something that everyone likes
to do, but I think it goes a long
way in terms of making sure that you're getting those
essential items in the cart and that you're using up
all those groceries. Such good advice, a such
good advice. That's Emily, McQuinn Food and beverage
analyst at morning consult.