Latest news with #consumerbehavior
Yahoo
a day ago
- Business
- Yahoo
"Basket size continues to improve": Empire CEO sees disconnect between consumer sentiment and in-store spending
Consumer reports say Canadians are cautious on spending, but customer behaviour tells a different story, says grocery chain Empire's ( president and CEO Michael Medline. 'There is no doubt that our customers' behaviour continues to improve,' said Medline on a conference call with analysts on Thursday following the release of fourth-quarter results. Empire operates Safeway, Sobeys, FreshCo, Farm Boy and Longo's, among other grocery retail brands. 'In Q4, we continued to see sales growth in our fresh department, which indicates customers are trading up from non-fresh to fresh products,' he said. 'Basket size continues to improve,' he added. Customers are also shopping at fewer stores than last year, and there's a continued decline in sales made through promotions. When people shop at fewer banner stores, it means the promotional penetration goes down, says Pierre St-Laurent, executive vice-president and chief operating officer. The company is also 'unable to reconcile' what the media says about inflation compared to what Empire's stores are experiencing, Medline adds. 'Let me be crystal clear,' he said, adding: 'We are not seeing inflation in our business outside of historical norms, and Empire's price inflation has remained very stable.' Empire's strategy to manage tariffs and protect its customers from price increases has included turning to more local, Canadian suppliers, tapping into non-U.S. alternative supply sources and working with suppliers to ensure that 'reactionary or unjustified costs' are not passed down to customers, Medline says. Much of the 'Buy Canada' sentiment, especially the preference for Canadian retailers, appears to have some staying power. 'It doesn't take a lot of people changing behaviour to make a real difference in retail, especially in the grocery business, and there are people who have changed their behaviours [and] will not go back,' Medline said. Empire plans to open 26 new stores in fiscal 2026, in hopes of gaining greater market share in pockets where the retailer doesn't have significant exposure compared to its competitors. In a release, the company notes its expansion efforts include Farm Boy, FreshCo and Voilà. 'Empire's underrepresentation in the discount channel is a relative disadvantage versus peers,' said RBC Dominion Securities analyst Irene Nattel and associate analyst Martin Gravel in a research note published June 10. For example, Loblaw has converted many of its conventional stores into discount banners. 'In our view, consumer spending is likely to continue to favour discount banners, and potentially reignite promotional intensity at a time when inflation remains elevated.' Over time, converting more stores to FreshCo should help reduce Empire's structural disadvantage in the discount segment, the note says. Empire raised its quarterly dividend to 22 cents per share, up from 20 cents. The dividend hike follows net earnings of $173 million ($0.74 per share) compared to $149 million ($0.61 per share) last year. As at 11:45 a.m. ET on Thursday, Empire's stock was trading at $54.56, compared to yesterday's close of $51.90. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
a day ago
- Business
- Forbes
The New CPG Playbook, AI Insights And Consumer-Led-Centric Innovation
Healthy Foods For much of the past few decades, large food and beverage companies have been low-risk and consistent – anchors of consistent success. But the rise of GLP-1 medications, coupled with a growing shift toward values-based purchasing, has disrupted that long-standing stability and loyalty to traditional brands and products. According to BCG, 'overall food and beverage market growth fell to 2.1% in 2024 (from an average of 5% in the previous three years), below the 2.9% rate of inflation. For large players (those with more than $1 billion in sales), 2024 growth was only 0.5%, while small and midsize brands outperformed, with growth of 4.9%' - indicating there's room for white space for startups to set a new standard for CPGs to break through (CPG Companies Need a New Recipe as Consumers Seek Healthier Choices). The food and beverage companies that will succeed aren't the ones clinging to legacy playbooks; they're the outliers doubling down on consumer-centric growth and harnessing the power of AI and machine learning to decode the real drivers of demand. By investing in smarter data strategies, these companies aren't just reacting to trends, they're anticipating them. This means putting more relevant, strategic products on shelves faster, and adapting quickly to the ever-shifting tides of consumer behavior. In a market defined by disruption, from GLP-1s to value-driven buying, agility and insight will separate the leaders from the laggards. How we got here Datassential's 2025 Trends Report listed cost as the just third defining factor driving consumer's food purchases; quality of product (56%) and great taste (52%) came out on top (Datassential's 2025 Food Trends Report). When cost is the major selling point for big CPGs, this data indicates that consumers are prioritizing incumbent products that can deliver functionality and flavor. Even with over 30% of each generation (Gen-Z, Millennials, Gen-X, and Boomers) opting to buy more store brand products as prices rise this year, according to a recent Prosper Insights & Analytics survey, big CPGs do not have nearly the same stronghold on the market. Prosper - As a Result of Price Increases Are You Doing Any of the Following The appointment of Robert F. Kennedy, Jr. as Head of the U.S. Department of Health and Human Services has compounded that turmoil, since his stated policies include the ban of Red Dye No. 40 and overall skepticism of ultra-processed foods. A number of the proposed ingredient bans, if enacted, will impact large food and beverage companies much more than startups. This can largely be attributed to their supply chain investments, notably in CapEX processes for existing formulations, as well as their focus on driving margin expansion through long lead time ingredient purchasing. Ironically, just as the market demands more innovation, many of the large companies have shut down their innovation departments and halted investment in building new brands altogether. In March, General Mills announced that it closed G-Works Innovation Studio, responsible for incubating and developing new brands and paused venture investments, and AB InBev's ZX Ventures 'divested from internal company building & exploratory initiatives'. Even the conglomerates that have not shied away from building and launching new products often see failure rates of more than 70% after spending three to five years in development with tens of millions of dollars invested in their efforts. This shows that they aren't tracking their consumer's demands when the demands are at their highest. Meanwhile, the proliferation of the omnichannel across industries means that CPG companies are no longer just competing against each other; they're competing against everything, from TikTok Shop to foreign brands looping into their customers' algorithms. (2024 Incisiv State of the Industry Innovation in Retail report) 'Relying on the status quo of product development is not serving today's grocery shopper,' says Chaz Flexman, CEO and Co-Founder of Starday Foods. 'With the evolution of data science and the rich trove of purchasing and shopper data that retailers have, there are smarter ways to understand whitespace on shelves and the products that will satisfy specific demands right as they are emerging - rather than several years too late.' Where do we go from here? Long gone are the days of generic products that serve every consumer - we now know that health is personal and what we put into our bodies directly affects that. The rise of Low Fodmap diets, the ever-present nature of protein in seemingly every category, or huge percentage of children that are being diagnosed with Top 9 Allergies are case in point. When consumers are looking to discover products or solutions to meet their dietary habits, more often than not they're turning online to TikTok, Instagram, or Reddit in hopes of discovering products or recipes that can help provide what they need. Today, generative AI can act as leverage, as if a company could deploy 10,000 staff across consumer insights - reading, tagging, and trying to understand the intent behind user-generated content (UGC) across the wide range of channels where that demand is expressed. Starday Foods, the AI-driven food innovation company that identifies unmet consumer needs and corresponding product opportunities, is demonstrating this in action. With ample consumer data and by leveraging machine learning, Starday can accelerate development cycles that have historically taken years. A prime example is Starday's chickpea protein toppers, All Day, which solves multiple problems. Starday's data identified intersecting trends of desires for both more vegan protein options and cleaner ones. Plus, people want convenience and nutrition, but they also crave variety and excitement. These insights led Starday to make All Day a topping with a chickpea base - because it's a clean, vegan alternative delivered in an easy format to weave into a consumer's life, as well as one that feels novel and adds variety to a diet while not requiring tremendous effort. All Day is now in the top-tier for store sales and category velocity at Sprouts nationwide. The future of AI + CPG product development CPG companies will now have to embrace the fact that using traditional methodologies for growth and product development will not give them the scale nor information for what they need to understand consumer needs. Software is enabling a powerful and data-driven new framework to help CPGs succeed. And yet, AI software itself cannot be the sole answer. 'Organic growth is more challenging than ever before - R&D cycles are long and expensive, while consumer behavior is evolving faster than most CPG teams can keep up,' said Flexman. 'At Starday, we believe the consumer mindset must come first. By making tech-enabled, data-driven decisions, we can help usher in a new era of CPG innovation—developing products consumers truly need. That's why we're partnering with CPG companies to help them not just adapt but thrive.'
Forbes
a day ago
- Health
- Forbes
A Subtle Design Choice Can Nudge Us Toward Healthier Choices
Post by Dr Nicolette Sullivan, Assistant Professor of Marketing in the Department of Management at the London School of Economics and Political Science. People using the self ordering kiosks to place their orders at a Burger King Restaurant in Malaga ... More Airport. 'Do you want fries with that?' You have probably heard that question before, for example when ordering a hamburger at a fast-food restaurant. However, it belies a hugely powerful technique to manipulate our choices: default options. In this case, french fries, one of the unhealthiest options on any menu, are the default – the option you will get if you don't take any action to switch to an alternative. My new paper, published this year in the Journal of Marketing Research, has found that restaurants and cafes heavily influence how healthily we eat just by deciding on which side dish is our default option, without us even noticing it. The reason we often eat fries with our burgers instead of a healthier side salad may lie not in our lack of willpower, but in the way choices are presented to us. In our new research, we uncovered a powerful psychological mechanism that helps explain how default options can significantly shape our behaviour. Our work shows that when an option is designated as the default, it doesn't just become easier to choose - it actually becomes more desirable. This subtle shift in perceived value can lead people to reverse their preferences, even in simple decisions like choosing between a healthy snack and a tastier, less nutritious one. Using a combination of eye-tracking, cognitive modelling, and large-scale online experiments, we found that defaults influence both where people direct their attention and how they evaluate their options. In one experiment, participants were more likely to choose a healthy snack when it was presented as the default, even if they initially preferred the indulgent alternative. This effect persisted even when the default required no less effort to select and when participants were fully aware of their options. What's more, we discovered that this 'golden halo' is not just a matter of convenience or habit. It reflects a genuine shift in how people perceive the value of the default option. Using a technique in computational modelling called the drift diffusion model, we were actually able to quantify this effect as a positive shift in the perceived value of the default. Essentially, the default option is treated as if it is inherently more desirable. For example, a food item that participants initially rated neutrally (a '0' on a scale from -2 to +2) could, when designated as the default, be perceived as significantly more appealing - equivalent to a +0.60 increase in its subjective value. This shift was large enough to reverse preferences on nearly a third of trials, meaning participants often chose a less-wanted default over a more-wanted alternative. In other words, defaults don't just nudge us; they change how we think. This has profound implications for public health and consumer policy. With diet-related diseases on the rise globally, small interventions that promote healthier choices without restricting our freedom to choose are more important than ever. Our findings suggest that simply changing the default options in a menu, grocery app, or school lunch line could lead to better outcomes at scale. But there's a twist: defaults don't always work the way we expect. In our study, indulgent defaults—like tastier, less healthy foods—were actually more effective when participants were primed to think about health. That is, even when people had health goals in mind, they were more likely to choose indulgent options if those were set as the default. This suggests that defaults can override even our best intentions. It's a cautionary insight, especially with movements like Dry January and Veganuary gaining popularity each year in which more of us want to make conscious dietary choices. To truly support these goals, it may not be enough to simply offer better options—we may need to remove unhealthy defaults altogether. Doing so could help create environments where healthier choices are not just available, but also easier and more aligned with our aspirations. By understanding and leveraging the effect of defaults, we can design smarter systems that help people make choices they won't regret. Follow LSE's Department of Management on LinkedIn. Check out our website.
New York Times
2 days ago
- Business
- New York Times
Trump's Trade Policies Prompt Companies to Raise Prices, Cut Staff
As President Trump's trade policies ripple through the economy, companies are increasing prices, cutting staff, reworking supply chains and making other adjustments. They say that the moves are necessary because more consumers are starting to pull back their spending. Retail sales slipped in May, data released on Tuesday showed, weighed down by a sharp decline in purchases of vehicles and building materials. That may reflect the hangover from an earlier surge of spending on big-ticket items before tariffs took effect. But restaurants and bars also saw a drop in sales last month. A recent survey by McKinsey found that inflation and tariffs were the biggest sources of concern for Americans. Most respondents said they were changing their spending habits because of tariffs. Several companies have noted a shift starting to show in their businesses. JetBlue's chief executive said in a memo to staff on Monday that it has scaled back its operations as weaker demand for travel disrupts its plans for the year. Walmart, which warned that tariffs could spur higher prices, recently flagged 'negative consumer sentiment' as having an impact. As officials at the Federal Reserve monitor how the economy is reacting to Mr. Trump's trade war, this is what some companies have said about prices, spending and the effect of government policies: JetBlue: The airline is reducing flight schedules, reorganizing its leadership team and pausing cabin refurbishments 'to match weaker demand,' Joanna Geraghty, the company's chief executive, wrote in a memo to staff on Monday. Procter & Gamble: The consumer goods giant said this month that it plans to cut 7,000 jobs, or about 15 percent of its nonmanufacturing work force. The company has said that it would probably raise some prices to mitigate the effects of tariffs, which it estimated would cost it around $600 million in its current fiscal year. Walmart: Consumer confidence has deteriorated because of 'looming tariffs' and 'immigration noise,' the retailer's chief financial officer, John Rainey, said at an investor conference last week. Walmart warned last month that tariffs would soon force it to raise prices because it could not 'absorb' all of the costs. In response, Mr. Trump called on Walmart to 'EAT THE TARIFFS' and not pass the costs on to consumers. Lululemon: The clothing brand known for its leggings saw its shares tumble earlier this month after it said that it experienced lower traffic in its U.S. stores in its latest quarter because of economic uncertainty and inflationary pressures. It also cut its full-year profit forecast as 'the current tariff paradigm has brought uncertainty into the retail environment,' Calvin McDonald, Lululemon's chief executive, told investors on a call. Mattel: The maker of Barbie and other toys said last month that it would increase prices in response to tariffs on imports from China. Mattel also scrapped its financial forecast for the year.
Forbes
2 days ago
- Business
- Forbes
What Businesses Can Learn From Hotels' Response To Economic Shocks
Mark Holzberg has more than 30 years of experience in the hospitality technology space and is CEO of Cloud5. The economic landscape in 2025 is expected to be shaped by new tariffs, inflationary pressures and unpredictable shifts in global trade. As businesses brace for these changes, many are looking for strategies to weather potential downturns, manage rising costs and keep customers engaged. As it was in 2009 and again in 2020, the hotel industry is on the front lines of this uncertainty. For hotels, the threat of reduced travel, rising construction costs and changing consumer behaviors is real. However, the following responses to these challenges—honed over two previous periods of intense trial—offer valuable lessons that can serve as a playbook for any consumer-facing business navigating turbulent times. Hotels are already witnessing changes in traveler behavior due to economic uncertainty. Reports indicate that hotel bookings in the U.S. have dropped 7.76% in the first quarter of 2025, compared to the same period in 2024. Additionally, major U.S. hotel brands are adjusting their forecasts in anticipation of continued consumer cutbacks on discretionary spending. This trend is expected to lead to more localized travel, shorter stays and fewer luxury splurges. In response, hotels are once again turning to their economic downturn playbook. They are closely monitoring consumer behavior to revise pricing, create new packages and deals, focus on regional and local markets with more "staycations," promote amenities to diversify revenue streams and invest in technologies that improve operations and reduce costs. Consumer priorities change quickly when financial pressures mount. Businesses across all sectors should stay close to their customers and continuously monitor their behavior. Whether through data analytics, customer feedback or direct engagement, companies should be prepared to quickly adapt their offerings. This means shifting focus from premium experiences to value-driven offerings, meeting customers where they are—both physically and emotionally—and delivering solutions and offerings targeted to the stated needs of the customer, adapting as those needs change. Whether you're in retail, services or hospitality, knowing your customer's current needs is essential. During the pandemic, many hotels adopted self-service options like contactless check-in. These solved a couple of problems—they served guests with near-complete social distancing and allowed hotels to cut costs while remaining operational with much leaner on-site staffing. One thing that hotels didn't account for was how much guests would like these options. Five years later, contactless check-in is still widely used today with no sign of slowing down. A survey found that nearly 80% of travelers would be willing to stay at a hotel with a completely automated front desk or self-service kiosk. This is a great, although somewhat unplanned, example of controlling costs without killing experience. For hospitality, it's about finding cost control options that are low risk to guest satisfaction. Contactless check-in is one, smart climate/energy-efficient technologies might be another and personalized housekeeping options yet another. These initiatives allow hotels to save money on labor and utilities without compromising on service quality. Cost management is crucial, but it's equally important not to sacrifice the customer experience that drives your business. Instead of making blanket cuts to expenses, focus on areas where operational efficiencies can be achieved without affecting your core value proposition or the way that your customers experience your brand. Know what's truly important to your customers and work from there. This might include investing in technology that streamlines operations, such as CRM systems, cloud-based tools or inventory management platforms. Businesses should look for areas where innovation and automation can deliver incremental cuts that add up to big savings without blowing the customer experience. By the end of 2024, the hotel construction and renovation pipeline had reached a record high, signaling strong momentum in the industry. However, with international materials—primarily imported from China and Vietnam—accounting for 15% to 20% of total project budgets, rising costs and persistent global supply chain disruptions are putting that momentum at risk. What was expected to be a year of robust growth in hotel development now faces potential setbacks, as many hotel groups begin to defer major capital expenditures (CapEx), including large-scale renovations, luxury upgrades and new construction projects. While the instinct is to draw back, hospitality's history shows that thoughtful CapEx projects that are executed during times of economic uncertainty can generate immediate value and position properties for higher levels of success once the storm has passed. For example, improving guest technology systems, enhancing mobile check-in experiences, enhancing property Wi-Fi or adding amenities that appeal to local or budget-conscious travelers were all proven as strong investment opportunities for hotel brands during previous times of economic uncertainty. While it might be tempting to halt all capital expenditures during times of uncertainty, businesses should approach these decisions with strategic thought. Rather than freezing all spending, prioritize investments that deliver short-term returns or those that directly improve customer engagement. For instance, a retailer may decide to delay the opening of new stores but invest in optimizing its e-commerce platform. Similarly, a manufacturing company might hold off on new facility construction but prioritize upgrading equipment that improves operational efficiency. The next few months will undoubtedly be challenging for businesses operating in the global economy. However, the lessons from the hospitality industry—particularly how hotels have successfully adapted to economic uncertainty in the past and are working to do so today—can offer valuable insights for businesses across all sectors. By staying close to customers, controlling costs without sacrificing quality and strategically managing CapEx, companies can not only survive economic turbulence—they can thrive. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
