The US economy is in relatively good shape when looking at measures like unemployment (it's down) and gross domestic product (it's up), but consumers are still feeling financial pressures. According to a Q1 2018 study by market researcher IRI, 47% of US internet users said they are making sacrifices to make ends meet. That's down from 50% in Q1 2017, but it's still a sizeable percentage.
Even so, one-quarter of respondents plan to buy more premium brands in the next six months. This intent was stronger with higher-income brackets, as well as with retirees and seniors.
When asked what they would be willing to pay more for, benefits beyond basic nutrition had the most interest (36%), followed by natural or organic products (29%). Paying extra for home delivery and in-store pickup of online orders were less popular.
Not surprisingly, consumers with household incomes over $100,000 were more willing to pay more for all of these features. Older millennials, those ages 29 to 37, were most willing to pay a premium for organics, at 41%. But millennials ages 18 to 28 (39%) and Gen Xers (37%) were also less resistant than older generations. Younger millennials were much more likely than older age groups to pay a premium for home delivery of goods bought online: 36% compared with 20% of older millennials and Gen Xers.
A May 2018 survey by Morning Consult dug deeper and asked US internet users which factors would make them spend 50 cents extra on a grocery item that cost $5. The leading motivator (cited by 45% of respondents) was one of the most simple: a brand that shoppers know and like. Brand names mattered most for soda, coffee and tea.
Origins were more important than organics: 37% of respondents would pay more for a product made in the US, and 32% would do so for a product made locally. Roughly one-quarter would pay extra for an organic item. A majority of those surveyed wouldn't spend 50 cents more on a small purchase under any circumstance.
Whether they caused respondents to spend more or not, products labeled "fresh" (81%) and "farm-fresh" (72%) were the two most appealing claims to consumers. Interestingly, 78% of Trump supporters said "sourced from American farmers" held appeal, compared with 68% of Clinton voters.
As in the IRI study and an earlier survey from Coresight Research, consumers are resistant to paying for grocery delivery. Most (51%) said they would not do so, while 29% would be willing to pay $1 to $5. However, shoppers who prefer the convenience of buying groceries online are more willing to pay extra for the service. Among the one-third who had bought food and beverages digitally in the past, only 35% wouldn’t pay for delivery, while 32% would pay $1 to $5 and 23% would pay $6 to $10.
According to Morning Consult, most who hadn't bought groceries online (65%) have no desire to shop for food via digital channels. Just over one-fifth had interest, but for whatever reasons hadn’t shopped that way yet.
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