More shoppers these days are scrutinizing their every grocery purchase, rethinking their favorites, clipping coupons, and looking for less expensive alternatives as they try to save money however they can, a few dollars at a time.

So why are they still splurging on summer vacations, going out to eat, and subscribing to a bunch of streaming services?

That’s the paradox that defines the “trade-off consumer,” according to a new report on where shoppers are cutting back – and where they’re not.

In its latest Trade-Off Consumer survey, the market research company Big Chalk analyzed how shoppers are stretching their food budgets by making tradeoffs.

More than a third of the shoppers surveyed said they are paying closer attention to grocery sales and buying whatever item is discounted instead of their usual choice. More than a quarter are shopping around more frequently to get the best deals, or using more coupons. And one in five shoppers are buying fewer groceries overall.

This behavior is most prevalent among the 34% of shoppers whom Big Chalk has labeled “trade-off consumers.” They’re cutting back in multiple categories, but primarily at the grocery store.

Overall, 55% of shoppers are trying to cut back on their grocery spending. Among trade-off consumers, a near-universal 93% said the same. Further down the list of areas where shoppers are tightening their belts are necessary categories like housing and auto expenses and clothing purchases, but plenty of discretionary categories as well, like going to the movies, dining out and traveling.

But groceries top the list by far, of where shoppers are looking to save. Some “may find questionable the relatively higher trade-off percentages in grocery – a category clearly essential to all consumers when compared with other discretionary items, like movie-going,” Big Chalk noted. “However, the grocery budget line item is a large line item that rears its head on a weekly basis for most households – meaning it’s more top-of-mind than an item that is purchased annually (like auto insurance).”

The grocery store is also a place that provides plenty of tradeoff opportunities. You need a house, and a car, and clothes, so it’s hard to cut back there. But with groceries, there’s always a smaller size, a cheaper brand or some other option that will help shave some dollars and cents off your total. The grocery category “offers a lot of choice and product substitution potential,” Big Chalk pointed out, “so while it is a necessity, it’s a necessity with a lot of choice attached.”

And besides, saving money on a routine weekly expense can pay off, as those dollars and cents can really add up – enough to help people afford some of life’s other little luxuries.

The state of the economy might lead one to expect greater consumer caution, “but that only appears in spurious sentiment surveys,” Big Chalk found. “Consumers are spending and plan to continue to do so.”

So how can grocery stores and brands entice trade-off consumers to do more of that spending with them?

“Right-size your pricing and promotions strategy to appeal to Trade-Off Consumers,” Big Chalk advises sellers. “Consumers are cognizant of grocery price increases” and still display a strong “demand for deals.” They’re also seeking to downsize, so Big Chalk suggests that sellers “revisit your price-pack architecture and determine the demand for your brand in smaller pack sizes or portion sizes.” And make sure the deals being offered are getting shoppers in the door: “Being in tune with which promotions pull traffic – but avoiding the loss-leader promotions that do not – will be crucial.”

The trade-off consumer may not be the biggest spender, or any grocery store’s best customer, but “in many ways, they are your most important consumer,” Big Chalk warned sellers. “At 34% of the population, it is imperative for consumer brands to find them and address them.”

Consumers may not be giving up their beach trips, their favorite restaurants, or their Netflix this summer. But they’re more than willing to leave a former grocery favorite on the shelf in favor of something cheaper. It will be up to brands and retailers to tailor their coupons and promotions to what deal-seeking shoppers want – or risk losing them as customers for good.

Image source: Phillip Pessar

Costco says it just wanted to let shoppers know about its good deals. A Washington state man says the retailer went about it the wrong way. So now, millions of Costco shoppers could end up getting a very good deal, as part of a $14 million settlement.

Without admitting wrongdoing, Costco has agreed to pay shoppers who received emails like the ones Seattle resident Michael Aaland said he received, with messages like “Today is the last day to access Member-Only Saving” and “Hot Buys available for 5 Days Only.”

Aaland sued Costco last year, claiming that the alleged limited-time deals were not actually limited at all. “The subject lines of certain Costco commercial email messages,” he claimed, “advertised temporary or time-limited promotions to consumers, when in fact Costco knew it was going to extend those promotions past the stated time frame.”

By claiming that certain promotions were for “5 days only” or that today was “the last day,” Aaland said Costco was creating a false sense of urgency, inducing recipients to drop everything and make a purchase when they otherwise might not have, in violation of various Washington state laws.

Costco denied doing anything wrong, but agreed to settle the case to avoid the time and expense of further litigation.

Since Aaland sued in Washington state court, the only shoppers who stand to benefit are Washington state residents. So it’s unclear whether Costco has agreed to change its email marketing practices nationwide, or only in Washington, and whether shoppers in other states who’ve received similar emails might decide they have a case, too.

For now, any Washington state resident who received an email from Costco from June 2, 2021 through July 7, 2026 is eligible to file a claim for their share of the $14 million that Costco has set aside to settle the case. Claims can be filed on a dedicated website from now through August 24th.

Under state law, Aaland argued, a recipient of one of the allegedly offending Costco emails “is entitled to receive $500 for each email message sent in violation of the law.” But those who qualify for a piece of the settlement are likely to receive far less.

If only around 28,000 customers file a claim, they could end up getting $500 apiece. But Costco said it has email addresses for about 3.34 million Washington residents in its database. If each and every one files a claim, that means they’ll receive no more than about four bucks apiece – and that’s before millions of dollars in attorneys’ costs and fees owed to the plaintiff are subtracted from the $14 million in the settlement fund.

So the only ones likely to earn a windfall from this settlement are the attorneys who prosecuted the case. Costco customers may not get much, except, perhaps, the security of knowing that the next time Costco promotes a limited-time deal – this time, they’ll really mean it.

Image source: Costco

“To attract harried but value-conscious consumers, more American companies are adopting a marketing strategy that drops the quick sale in favor of low prices year round… With it, retailers seek to re-establish credibility in the wake of a former practice of sales versus regular prices.”

So reported the New York Times – 34 years ago.

Perhaps proving that everything old is new again, a number of major grocery chains appear to be rethinking the extent of their reliance on promotions, as more shoppers are looking for simple low prices and rejecting sales and deals and stock-up specials, like it’s 1992 again.

“Our biggest leakage is to the big players,” Albertsons CEO Susan Morris told investors last week, as value-seeking Albertsons shoppers defect to grocery retailers with everyday low prices, like “Walmart, Amazon and, to some degree, ALDI.”

“Customers are being more deliberate with their spending and at times, shopping us selectively. We’re getting too many promotional trips and not enough of the full basket,” Kroger CEO Greg Foran said last month. “You start to think about, ‘Well, gee, maybe I need to get a little bit more affordable on price.'”

So the old strategy of luring shoppers in with eye-catching deals on some products, and higher regular prices on others, doesn’t seem to be working as well. More shoppers are either cherry-picking the deals and getting the rest of their groceries somewhere else, or they’re tuning out the deals and shopping where they know they can get more consistent low prices.

The location analytics company Placer.ai has regularly pointed out the strength of discount grocers like Trader Joe’s, ALDI, and Lidl. Throughout the past year, “they consistently outperformed the broader grocery category, underscoring the enduring pull of value in a cost-conscious environment,” Placer.ai found. In the first quarter of this year, visits to discount grocers grew 1.7%, as compared to traditional grocery stores’ 1.3%.

Where traditional grocers are succeeding, is in short visits lasting under 10 minutes. “This suggests that habit, proximity, and assortment breadth may matter more than price positioning when a shopper just needs a few items fast,” Placer.ai noted. But when shoppers need to stock up for the week, they’re increasingly headed to stores with everyday low prices.

So how are traditional grocers responding to this phenomenon? With lower prices – and more strategic promotions.

Regional grocers including Giant Eagle, Stop & Shop and SpartanNash-owned chains like Family Fare and Martin’s recently announced lower prices on hundreds of frequently-purchased items. But that’s more like a promotion disguised as across-the-board price cuts, since the summertime discounts are set to expire at the end of the season.

So bigger grocers like Albertsons and Kroger are looking to make at least some lower prices more permanent. “We are investing a little bit more in frontline pricing,” Albertsons’ Morris said. “Improving the customer value proposition is the most direct path to strengthening customer engagement, loyalty and long-term growth.” Some lower prices will be aimed at all shoppers, while others will be targeted to shoppers considered most likely to stray. “It’s in frontline pricing, but also we’re able to use our personalized deals and our loyalty program to market specifically to those lower-income customers and be able to give them some price locks, some hold down pricing, some offers that help stretch their basket and maybe keep them from leaking as aggressively to some of the pure price players.”

As for Kroger, “we have opportunities to sharpen our pricing and make value simpler for customers,” Foran said. “Over time, our promotions have gotten too complicated and our price position has not kept pace where it needed to.”

Unlike some retailers three decades ago, though, neither grocery chain is ready to give up its promotional pricing model altogether. “We do not need to be the lowest-priced retailer. We need to be more competitive,” Foran said. “We will still be promotional, that is part of who we are, but sharper and easier for customers to understand.”

“We are not making a huge change in our go-to-market strategy from a pricing promotional perspective,” Morris echoed. “It’s really just about sharpening” prices, “not just blanket cost reductions or price reductions or promotions, but personalized value.”

“Consumers seem to have less patience for time-honored traditions such as watching for supermarket specials and organizing sheaves of coupons,” the Times reported in 1992. Less than two decades later, the extreme couponing craze made searching for deals more popular than ever. That, of course, tapered off. And now the pricing pendulum may be swinging in the other direction again, as shoppers seek the simplicity of low prices.

“Many people believe that other supermarkets and retailers are likely to adopt more predictable pricing in the future,” the Times reported. “It will gradually become more prevalent in the 90’s,” a retail analyst was quoted as saying, before adding, “Who knows what will happen later?”

When it comes to whether traditional grocers’ latest strategy of lowering prices without giving up on promotions will work – it seems we’re about to find out.

Image source: Kroger

Paper grocery price tags have earned a reprieve, as lawmakers in one state have temporarily banned digital price displays, as part of a law banning “surveillance pricing” that they say digital tags might enable.

New Jersey has become the third state to crack down on the use of personal data to set grocery prices. But it’s the first to crack down on electronic shelf labels in the process.

Governor Mikie Sherrill has signed into law the Fair Price Protection Act, which bans any “pricing strategy that determines or varies the sale price of groceries and other foodstuffs based, in whole or in part, on personal data,” such as “online activity, location, purchasing history, or other collected data,” to set prices “based on what an algorithm predicts a shopper is willing or able to pay.”

Critics had complained the measure could impact grocery loyalty programs, digital coupons and personalized discounts that are based on your shopping history. But the law exempts loyalty programs that a shopper voluntarily joins, and knowingly provides personal information in order to do so. So the law essentially only forbids grocers from hiking prices for certain shoppers based on personal information they have not agreed to share – like their online search history or their ability to pay.

Grocers insist this isn’t happening anyway. So the law may simply be a solution in search of a problem, just like similar new laws in Maryland and Connecticut, though some supporters say the idea is to outlaw it before it does start happening.

What stands out in this latest law is the one-year moratorium on any new electronic shelf labels. Many grocery chains across the country have been replacing paper price tags on the shelf with digital tags that can be updated, as needed, more efficiently. Some of New Jersey’s largest grocery retailers, including ShopRite and Walmart, already use them.

But no one else will be able to for at least a year, under the new law. The measure directs state authorities to conduct a study on the use of digital tags, and whether they can be – or are being – used to display different prices to different shoppers. The results of that study, and how lawmakers respond to it, could determine whether grocers are able to resume installing digital tags after the year is up, or whether the state decides to outlaw them, too.

Some lawmakers in other states – and in Congress – have proposed outright bans on electronic shelf labels, fearing that retailers have more than just efficiency in mind when installing them. “This technology enables corporations to exploit shoppers’ personal data to set individualized prices that can change in the blink of an eye,” the United Food and Commercial Workers warned.

“Contrary to some claims, grocers do not use ESLs (electronic shelf labels) for surge pricing or surveillance-based pricing,” the trade group FMI — The Food Industry Association countered. “In grocery retail, ESLs are used to maintain pricing accuracy, reflect promotions quickly and provide better information to customers.”

For supporters of New Jersey’s measure, though, they figure it’s better to be safe than sorry. “New Jersey families are already feeling the pressure of higher costs. The last thing they need is companies secretly using their personal data to charge them more than someone else for the exact same product,” Governor Sherrill said. “If businesses want to compete, they should do so by offering better prices, not by finding new ways to squeeze shoppers. This law puts New Jersey shoppers first by protecting their privacy and ensuring fairness in pricing.”

The law doesn’t take effect for a full year. So grocers still have plenty of time to install more digital price tags, use them to spy on their customers, and price gouge them based on their most private, personal information. Grocers say none of them are doing this now, and none will be doing it when it’s made illegal next year. But supporters of the country’s most far-reaching surveillance pricing law – so far – say it can’t hurt, just in case.

Image source: SOLUM

If you can’t beat ’em, join ’em!

As an increasing number of grocery shoppers turn to artificial intelligence to help them do their grocery shopping, they’re increasingly becoming less loyal to their neighborhood grocery store. AI, after all, doesn’t feel loyalty to anyone – it just looks for the best products at the best prices, wherever they happen to be, so you don’t have to.

So one grocery chain is now embracing AI as a way to keep its customers informed and happy – and to keep them from straying.

St. Louis-based Schnucks, with 112 stores across three Midwestern states, has announced it will soon offer shoppers a Schnucks-specific AI shopping assistant. Available by “late summer” on the store’s website and in its app, the AI agent will be at the ready for shoppers who don’t want to scour circulars or nutrition labels to find the best products or promotions.

“This agent won’t just be a search bar,” Schnucks Chief Data and Information Officer Tom Henry said in a statement. “It will be a personalized digital shopping assistant that understands Schnucks aisles, sales, promotions and customers’ lifestyles and can help shoppers plan meals, discover savings, organize parties, and pair food and wine just to name a few uses.”

The AI assistant will be powered by VitalityIP, which focuses on healthy eating and the use of AI to suggest personalized meal plans and nutrition recommendations. VitalityIP will bring “medical-grade health insights and ingredient-level product data” to the partnership, while Schnucks will bring data from its loyalty program to provide insights based on “real customer journeys and actual store inventory.”

The deployment could be seen as Schnucks’ effort to embrace AI and use it to its own advantage, rather than try to push back against it. A recent report from 5WPR found that the suggestions AI shopping assistants offer, do not necessarily correspond with decisions shoppers might make on their own. While Walmart is the most popular grocery shopping destination in the country, Costco was more likely to turn up in AI-powered shopping recommendations.

And while Schnucks is a smaller chain with a more modest footprint, it doesn’t even show up in 5WPR’s top 25 list of AI’s most-recommended grocery stores.

So by embedding an AI shopping assistant within Schnucks’ app and website, and cross-referencing product inquiries and dietary suggestions with insights into its own prices and promotions, Schnucks can keep its customers from getting third-party AI recommendations to shop at Costco instead.

“Our customers are telling us they want trusted guidance” on their visits to Schnucks, Henry said. “Together with VitalityIP, we’re creating a shopping experience that’s not only enjoyable but also more personal, more helpful and more rewarding.”

And if it results in more Schnucks shoppers showing up to shop at Schnucks (say that five times fast) – even better.

Image source: Schnucks