MIDA’s Consumer X-Ray shows a 5% year-over-year drop in grocery spending
The amount of money consumers are spending on groceries a month dropped to $422, a fall of 5% versus the expenditure reported in 2018, similar to that recorded in 2015, according to the study released by the Chamber of Marketing, Industry and Food Distribution, or MIDA, as the trade group is known for its initials in Spanish.
This year, the study found that the temporary increase in the funds for the program known as PAN for its initials in Spanish, gave a needed respite to the food industry after the many challenges caused by the passage of Hurricane María, specifically the replenishment problems that affected the industry for months.
But when the boost ended earlier this year “the impact on the consumer and sales was immediate,” the trade group said.
“This reduction is directly related to the availability of PAN funds, since its participants claimed a decrease in 11% on their monthly expenses to $396. Non-users of the PAN program saw their expenses practically unaltered with a monthly average of $474,” said Freddie Hernández, chairman of the 2019 Consumer X-Ray Committee.
The study, commissioned to marketing research firm IPSOS — which has more than 30 years of experience — consisted of 1,350 field interviews conducted during the month of March and April 2019 in the 11 regions across the island. This year, the research was complemented by interviews done during visits to the grocery store and the home and with data from similar studies both in the U.S. and locally, MIDA officials said.
Although the PAN benefits are used by about 45% of the island’s general population, it accounted for half of the households surveyed in the study sample, a figure similar to what was recorded last year.
“An important finding is that, in view of the recent discussion with the Fiscal Oversight Board about possible work requirements for program participants, 77% of respondents agree that beneficiaries should work or study in exchange for the benefit,” Hernández said.
Another aspect that emerges from the study were the main channels visited to buy food: Supermarkets; Gas stations; Pharmacies; Bakeries and membership stores, in that order.
“Supermarkets recorded the most significant increase in visits with 5.9 visits per month, an increase of 25%. The rest of the channels recorded reductions in the frequency of visits, but with visit levels similar or superior to those registered in 2017, pre-María,” said Roxana Trabanco, commercial director of Ipsos Puerto Rico.
Despite the increase in the frequency of visits, grocery stores registered a drop in the total monthly expense of about 10% to $204. Gas stations also recorded a drop in visits and spending, but in that case the spending is still higher than in 2017, which shows that they have become an option for the consumer when buying food, the study showed.
In contrast, pharmacies registered a 5% increase in monthly spending for food purchases.
Weekly specials, online shopping prevail
The end of the temporary increase in PAN benefits last March also prompted consumers to identify the weekly specials as their main motivator to visit an establishment, followed by the proximity, regular prices and variety.
“It is very illustrative that the importance of special prices increased by 20% in relation to last year,” said Hernández.
Given the extensive number of marketing vehicles available, the 2019 study took on the task of understanding its effectiveness in motivating different consumer actions. The conclusion was clear — each marketing vehicle fulfills different purposes.
“As an example, newspapers, printed and digital, are the most effective in promoting offers and specials.
However, when it comes to improving the opinion of a brand, the recommendation of family or friends is the most important, followed by recommendations from professionals or experts,” Hernández said.
Regarding the issue of online shopping, the food industry has accelerated its strategy to embrace technology as a tool to meet consumer needs and increase sales, with that vehicle as the most used.
Online shopping options are only available in limited geographical areas, so in the 2019 Consumer X-Ray, which covers the whole island, still does not present numbers that allow a deep analysis of this trend.
To complement the data presented in the Ipsos survey, an additional survey was carried out among 3,500 users of the BUREA application of which 10% use online shopping services.
Of those who use BUREA, 97% would recommend the use of online services, which shows satisfaction and loyalty, the study showed. The main categories purchased online are canned goods, cereals, meats and fruits/vegetables.
The full results of this year’s Consumer X-Ray will be revealed June 27, when MIDA will hold its annual convention.