Grocers Get Creative to Meet Consumers’ Demand for Cheap Food

This week in grocery, consumers seek discount food options, and Instacart ships Christmas trees.

Canadian discount retailer Dollarama, which has more than 1,400 locations across the country, has benefited from consumers’ search for less expensive groceries amid rising prices and ongoing economic challenges.

“We continue to see sustained demand for a vast selection of affordable products from coast to coast, notably in the consumable product categories, which has fueled an acceleration in same-store sales,” CEO Neil Rossy told analysts on a call Wednesday (Dec. 7) discussing the retailer’s third-quarter financial results. “Our value promise in a high inflation environment is even more relevant as consumers juggle the pressure on their wallets and adjust their spending strategies.”

Indeed, if United States consumers’ behavior is any indication, reigning in food spending is top-of-mind for many shoppers as prices continue to rise. Research from the October edition of PYMNTS’ Consumer Inflation Sentiment study, “Consumer Inflation Sentiment: Consumers Buckle Down On Belt-Tightening,” which draws from a survey of more than 2,600 U.S. consumers in September, finds that 58% are cutting down on nonessential grocery spending. Additionally, 47% are switching to cheaper merchants.

Get the study: Consumer Inflation Sentiment: Consumers Buckle Down On Belt-Tightening

Dollarama’s results mirror those of United States’ discount retailers in the grocery category. Discount variety store chain Dollar General, for instance, has been expanding its DG Fresh food-centric initiative amid its strong performance, and competitor Dollar Tree has seen 9.3% comparable sales growth in consumables.

“The way things are shaping up so far, of course, we have a stronger penetration of consumables,” said Rossy.

Grocers Drive Sales of Soon-to-Expire Foods with Tech Partnerships

It is not only dollar stores looking to adjust to meet consumers’ cost-cutting expectations but also supermarket chains finding ways to offer their existing products at lower prices.

Both northeastern Ahold Delhaize USA subsidiary Stop & Shop and discount grocery chain Save A Lot announced this week the launch of the Flashfood program, a digital marketplace on which to sell food that is soon to reach its best-by date at lower prices to additional stores.

The former announced Monday (Dec. 5) that it is bringing the technology to more New York City locations after launching at its first location in June.

“Our shoppers in the boroughs can benefit from significant savings on groceries while also helping the planet,” Stop & Shop president Gordon Reid said in a statement.

Meanwhile, for Save a Lot operator Yellow Banana, which runs 38 locations in Dallas, Texas and Jacksonville, Florida, said Wednesday that it is bringing the program to all its stores.

These moves mark an ongoing effort on grocers’ part to adapt to shoppers’ shifting habits, retaining their loyalty as consumers seek to cut out unnecessary spending.

Instacart Drives Holiday Sales with Christmas Tree Deliveries

Instacart is doing everything it can to cash in on consumers’ end-of-year and holiday spending.

The aggregator announced Monday that it is delivering Christmas trees for the first time from various retailers.

“We’re excited to offer Instacart customers same-day, nationwide tree delivery this holiday season,” chief product officer Daniel Danker said in a statement. “We’re delighted to offer a convenient and time-saving way for customers to get their trees and seasonal decor.”

The news comes alongside the aggregator’s announcement Wednesday (Dec. 7) of the launch of a pop-up online shop for eligible items with Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs), a bid to drive sales with consumers looking to use their funds before they expire.

With these end-of-year initiatives, Instacart hopes to counteract consumers’ belt-tightening amid the economic slowdown. The study “New Reality Check: The Paycheck-to-Paycheck Report: Holiday Shopping Edition,” a PYMNTS and LendingClub collaboration, found that, while 89% of consumers shopped during the 2021 holiday season, only 79% plan to do so this year.

Read the report: New Reality Check: The Paycheck-to-Paycheck Report: Holiday Shopping Edition