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    Americans Overestimate Grocer Profit Margins and Food Inflation Rates

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    In a recent survey conducted by customer data science company dunnhumby, Americans believe that grocery retailers are earning a 35.2% net profit margin – 14 times higher than grocers’ actual net profit margin average of 2.5% – and that food-at-home inflation is 24.3%, double the annual rate reported by the U.S. Bureau of Labor Statistics.[0] This finding appeared in the dunnhumby Consumer Trends Tracker (CTT), part of the dunnhumby Quarterly, a strategic market analysis of key retail themes, with the third edition focusing on navigating uncertainty.[1]

    “We found that retailers are in a precarious position with their brand perception, since customers are vastly overestimating grocers’ store profit margins and inflation rates, while they themselves are battling food prices,” said Matt O’Grady, president of the Americas, dunnhumby.[0] In order to demonstrate empathy towards customers, retailers should evaluate their prices, loyalty programs, and messaging to ensure they are providing the most support possible during these difficult economic times.[0]

    The younger demographic is the most hopeful for the near future, however, not for the long run.[1] For 2023, 31% of consumers aged 18-34, believe that their finances and the state of the country will get better, versus just 13% of consumers older than 65.[0] No significant age-related differences were observed in the three- and five-year periods.[1]

    The issue of food insecurity persists.[0] Approximately one-third of households indicated that, due to financial constraints, they have had to either skip meals or reduce their portion sizes. Of those surveyed under the age of 44, 39% reported having skipped or reduced their meal sizes. Households that contain children are 8% more likely to have skipped or reduced meal sizes than households without children.[1] Consumers living in Idaho, Oklahoma, Arkansas, Tennessee and West Virginia reported the highest numbers, where over 40% had skipped or reduced the size of a meal in the last year.[0] Residents of Washington, Minnesota, Michigan, Massachusetts, and Maryland reported the lowest percentages, with about 20% having gone without or cut down on a meal in the last twelve months.

    Customer sentiment is being impacted by inflation worries.[1] A survey revealed that customer sentiment is the lowest it has been in 50 years, and when asked why, consumers overwhelmingly (by a 5:1 margin) cited inflation as the primary culprit, with COVID coming in second.[2]

    0. “Study: Shoppers think grocery stores are raking in cartfuls of cash” Winsight Grocery Business, 15 Feb. 2023, https://www.winsightgrocerybusiness.com/inflation/study-shoppers-think-grocery-stores-are-raking-cartfuls-cash

    1. “Americans Believe Grocery Store Profits are 14 Times Higher than Reality and Inflation Is Twice as High a” Benzinga, 15 Feb. 2023, https://www.benzinga.com/pressreleases/23/02/b30920256/americans-believe-grocery-store-profits-are-14-times-higher-than-reality-and-inflation-is-twice-as

    2. “Americans Believe Inflation is Worse Than Reality | News” Specialty Food Association, 15 Feb. 2023, https://www.specialtyfood.com/news/article/americans-believe-inflation-worse-reality

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