The New Consumer

Behaviors Related to Inflation

BY JACQUELINE BARBA

Editor’s Note: In each issue of Path to Purchase IQ, we’ll showcase a curated roundup of consumer research studies and other insights that paint a picture of emerging trends in shopper behavior in this department, called The New Consumer. This month’s installment o ers a glimpse into the COVID-19 pandemic’s latest e ects on consumer behavior, sustainable product purchasing trends and the trajectory of the cannabis market.

PANDEMIC’S LATEST EFFECT

With infl ation continuing to harshly impact U.S. consumers, recent insights from Kroger data analytics subsidiary 84.51 and its “February Consumer Digest” delved into how consumers are fi ghting infl ation and the latest shopper trends and behavioral analytics.

The report pointed out that COVID-19 concern trended downward among shoppers as cases began to decline. In February, 68% of shoppers said they were very concerned with infl ation. Of those shoppers: • 56% have been looking for sales and promotions more often; • 40% have switched to a lower cost brand; and • 34% are cooking from home and 30% are going out less.

If there was a need to cut back, 57% said they would cut out adult beverages, 56% would cut snacks and 46% would eliminate beauty items. However, while 56% said they have been cutting back on non-essentials like snacks and candy, the actual shopper behavior shows that units sold are fl at and shoppers are still snacking. Overall, however, only 22% of consumers responded that they feel comfortable with their current fi nancial state.

In terms of meal planning, consumers are looking for “speed and simplicity.” Many said they search for cooking inspiration. Thirty-fi ve percent said they use Google, 33% use store ads, 21% use online sites such as Pinterest and 14% use apps on their phones.

SUSTAINABLE PRODUCT PURCHASING

Marketing data and analytics company AnalyticsIQ identified sustainable shopper trends using its database of more than 241 million consumers and 118 million households nationwide. It compiled a report — dubbed “Green Personas Reach Consumers Who Put Dollars Behind Their Belief in Climate Change” — which categorizes shoppers into four “green personas” to help marketers identify the gap between intentions and behaviors.

Individuals typically align with one of the four personas based on their cognitive fl exibility (low or high) as well as their belief in the concept of climate change (weak or high). The personas are the sustainable living spender, climate change conscious consumers, climate change skeptic and the climate change denier.

Although many consumers indicate that they are invested in protecting the environment, the majority actually overestimate their level of dedication and their willingness or ability to spend more on sustainable products, according to AnalyticsIQ’s green personas product sheet and detailed data.

Sustainable living spenders score highly on both their belief in climate change and cognitive fl exibility, making them the most green-motivated consumers and the ideal target for brand marketers of environmentally friendly products and services. Most consumers who fall under this persona are: • Women around the age of 52. • Highly educated and have an annual household income that’s 37% higher than average. • 26% more likely to purchase beauty products. • 21% less likely to shop at Walmart — 10% more likely to shop at Target.

Some other key findings from the report include: • Green, sustainable products and services are on their way to becoming a trillion-dollar market. • Nearly three quarters (75%) of consumers said they prefer eco-friendly brands, but 60% are unwilling to pay more money for that green product. • Nearly 75% of overall consumers said they prefer eco-friendly brands, and green shoppers in particular spend 23% more on discretionary items than average each year.

CANNABIS SALES PREDICTIONS

BDSA, a market research firm focused on the legal cannabis market, kicked off March by releasing its latest forecast with cannabis sales data for the U.S., Canada and global markets. For 2022, global cannabis sales were projected to reach over $35 billion, a jump of roughly 22% compared to 2021 sales, which totaled $29 billion, according to BDSA’s most recent five-year rolling market forecast update. BDSA also predicts that by 2026, that number will surpass $61 billion, a compound annual growth rate (CAGR) of more than 16%.

“Though most legal cannabis markets saw sales soften in the second half of 2021, the global cannabis market is expected to see brisk growth in 2022, driven by strong sales in new and emerging markets in the U.S., steady growth in Canada and international markets lead by Mexico and Germany,” said Jessica Lukas, chief commercial officer at BDSA, in a March news release.

Some key predictions from the forecast included: • U.S. cannabis sales to reach $46 billion in 2026, a CAGR of approximately 14% from 2021. • California, which launched its adult-use market in 2018, will remain the largest contributor to overall

U.S. sales growth, with the next top four contributors to growth being New York, New Jersey, Florida and

Michigan by 2026. • The majority of growth in Canada is expected to come from Ontario, growing over $1.3 billion by 2026. British

Columbia will also be a leading contributor, adding $420 million to total sales by 2026. • International sales are expected to reach $9.5 billion in 2026, a CAGR of nearly 46% from 2021.

In 2021, new markets in the U.S. experienced some of the strongest growth, particularly in the Midwest. Illinois sales grew approximately 70% in 2021, totaling $1.8 billion, after the state legalized recreational cannabis in June 2019. Missouri’s medical-only market reached a high of $210 million.

Emerging markets are also expected to be a major driver of sales through 2026 as the number of nonlegal states dwindles. The research firm says the pace of legalization could even increase as the latest wave of medical and adult-use bills are seeing positive bipartisan support at the state level. IQ

Brand Watch

Instacart Expands Initiative to Women-Owned Brands

BY CHARLIE MENCHACA

Grocery delivery platform Instacart has extended its support of underrepresented groups with a $1 million commitment to amplify women-owned CPG brands.

To celebrate and honor Women’s History Month in March, the company launched the second wave of its Instacart Ads Initiative with partners Sweet Loren’s, Three Wishes Cereal and Twrl Milk Tea. Eligible brands will receive free Instacart Ads credits starting in April to use with the organization’s agship sponsored product o ering.

Ali Miller, head of ads product at Instacart, answered a few questions about the initiative and its purpose.

P2PIQ:How has the digital aisle evolved over the past few years since the pandemic?

Ali Miller: More and more people are now leveraging a mix of online and o ine channels to do their grocery shopping. For CPG brands of all sizes, the digital aisles o er a new, more adaptable opportunity to engage with consumers. Online grocery allows for innovation, including new kinds of advertising solutions that help brands engage consumers and storytell directly at the point of purchase.

As more people turn to Instacart to shop from their favorite retailers and discover new items, we’re focused on creating unique ways to support brands looking to get discovered by introducing exciting products, engaging consumers and landing in baskets.

P2PIQ: What do you hope consumers will gain from being introduced and connected to these female-led brands?

Miller: Part of our goal with our Instacart Ads Initiative is to democratize the grocery store by o ering emerging brands a meaningful boost via advertising to connect with consumers directly at the point of purchase. The women-owned brands that are a part of our Ads Initiative will be able to surface their products across the Instacart Marketplace with our sponsored product o ering.

Our hope is that consumers will be able to discover new products and brands that ll their needs or become household favorites, and nd inspiration to create a new recipe or send a treat to a loved one after being introduced to these women-owned brands across Instacart.

P2PIQ: Can you give us an update on the Instacart Ads initiative for Black-owned brands?

Miller: We rst launched the Instacart Ads Initiative last year, committing up to $1 million to amplify emerging Black-owned CPG brands within the Instacart Marketplace. Our focus on Black-owned brands continues into this year, and brands are welcome to sign up on a rolling basis. We continue to support participating brands with campaign setup at launch, and access to our self-service ads platform.

To date, our partners in the initiative have seen meaningful growth. One partner saw their weekly sales and basket penetration more than double as a result of their sponsored product campaign via the initiative. Participating brands are based in states such as California, Texas, Tennessee, Missouri, Ohio, Pennsylvania, Maryland, New Jersey and New York. We’re so proud of our progress, but there’s much more work to do on this front.

P2PIQ: Do you foresee the Instacart Ads Initiative expanding again in the future to support more underrepresented groups?

Miller: That’s the goal. We want Instacart Ads to have a lasting impact on the CPG ecosystem by equipping emerging brands with the tools, resources and investment needed to excel in online grocery. I’m really excited about the opportunity ahead of us to continue amplifying and empowering brand owners from historically underrepresented backgrounds.

P2PIQ:How long will the Instacart Ads Initiative for women-owned brands run?

Miller: The Ads Initiative for womenowned brands will run until the end of the year. Eligible brands are welcome to sign up on a rolling basis throughout. Women-owned brands can sign up at Ads.Instacart.com. IQ