CPG Clarity Study: A Price War?

The third installment of the “CPG Clarity Study,” a series from Cadent Consulting Group and Fetch Rewards that is designed to analyze real-time and future consumer shopping and usage behaviors, shows that shoppers across all income levels are increasingly worried about the economy and are planning to spend less. At the same time, shoppers are continuing to experience higher-than-normal prices at grocery stores, even as consumer behavior returns to pre-COVID levels.

This combination of heightened economic anxiety and sustained price sensitivity among consumers could signal an impending price war among retailers, says Ken Harris, managing partner of Cadent Consulting Group. “Winning here on price is going to be critical for retailers,” Harris says. “Retailers must offer strong deals to shoppers who are going to multiple stores.”

A quarter of survey respondents reported feeling pessimistic about the economy in August — up from 20% in June and 15% in April. Meanwhile, nearly 60% of in-store grocery shoppers and 35% of online grocery shoppers reported experiencing higher prices last month. Among lower-income shoppers, nearly 50% reported visiting multiple stores last month — presumably seeking out the best prices and looking for in-store deals. Higher-income shoppers are more likely to buy groceries online, the study found.

“These findings underscore the importance of providing meaningful, reliable ways for shoppers to save money,” says Wes Schroll, founder and CEO of Fetch Rewards. “Now more than ever, there are opportunities for brands and retailers to build loyalty by delivering real value to consumers.”

If a price war occurs, it will likely focus on staples like refrigerated meats, cheese, and alcohol. Over the past three months, shoppers are continuing to purchase these categories at higher levels than they did before COVID-19, the study found, signaling that these categories will be hotly contested and that price will be a key lever. Other categories like canned vegetables, frozen meals, nut butters, beauty and personal hygiene saw shoppers purchasing less. 

“These are items that go to the top of the grocery list,” Harris says. “With CPG companies holding back trade spend, some retailers are losing share. Competing on price here would be a strategy to capture more of the marketplace as shoppers return to more normal shopping patterns.” 

The study showed a continued stabilization of consumer behaviors, with shoppers returning to stores more frequently and spending less per trip compared to the height of the pandemic lockdown orders in March and April.