Study: Shoppers think grocery stores are raking in cartfuls of cash

Shoppers think grocers are making 14 times more profit than they actually are. And they believe food-at-home inflation is about two times higher than reality.

That’s according to an analysis released Wednesday by Chicago-based customer data science platform dunnhumby.

The dunnhumby Consumer Trends Tracker found that U.S. shoppers believe grocery retailers are earning a 35.2% net profit margin, 14 times higher than the average of 2.5%. The report also found that consumers think food-at-home inflation stands at 24.3%, more than twice the 10.4% year-over-year inflation figure released Tuesday by the U.S. Bureau of Labor Statistics.

“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,” dunnhumby President of the Americas Matt O’Grady said in a statement. “Retailers need to show they are empathetic to customers through their prices, their rewards/loyalty offers, and with messaging to best support shoppers during these challenging financial times.”

Less than a quarter (22%) of consumers surveyed said they predicted inflation would improve in 2023, while 45% said they believe the situation would get better three years from now.

Younger shoppers, though, have a bit more of a rosy outlook: Thirty-one percent of consumers aged 18 to 34 said their personal finances and the state of the country will improve this year, compared to just 13% of those over 65.

A small percentage of those surveyed reported a better financial situation than they did in dunnhumby’s July report. The number of shoppers who said they’d have trouble paying an unexpected $400 expense dropped from 64% in July to 60% in November. Plus, 48% of shoppers in the latest survey said they were able to afford kind of food they want to eat, up from 43% in the earlier analysis.

But food insecurity continues to be a serious problem, with 31% of households saying they have skipped or reduced the size of a meal because of financial reasons, dunnhumby found. Consumers in Idaho, Oklahoma, Arkansas, Tennessee and West Virginia reported the highest rates of food insecurity, with more than 40% saying they had skipped meals or made them smaller. Shoppers in Oregon, Oklahoma, Louisiana and West Virginia reported the highest rates of financial uncertainty, the report found.

Despite ongoing financial concerns, consumers are still also hunting for convenience. Eighty-one percent of those polled said easy-to-shop apps and websites are important to them, up 4% from the previous report. And 78% said they want grocers to have more-convenient delivery and pick-up time slots, also up 4%.

Families reported being 16% more likely to interact with a grocer’s app and have a 10% greater need for the “retailer to pick products as well as they would,” compared to those without kids, dunnhumby found.

To conduct the Consumer Trends Tracker survey, dunnhumby interviewed 6,012 consumers around the U.S. in three waves (April, July and November).