As higher commodity prices are becoming increasingly the "new norm" rather than something temporary, there will be a greater impact on consumer behavior and retailer strategies than has been apparent so far, according to a new report by Deloitte LLP. Although current food prices may come down from their current levels, they won't completely reverse, and the increases already seen represent "a permanent step change," according to the report.
Bruce Westbrook, Deloitte consumer products consulting leader, said higher food prices will push consumers to buying food for at-home consumption over eating meals in restaurants, and at-home purchases will shift toward private label, discount products and low-priced retailers.
Retailers in price-competitive markets such as the U.S. and U.K. will need to absorb costs that they may be little able to cover or, to pass on higher price, provide "real product differentiation, strong brand equity, innovative products and services and a superior customer experiences," he said.
A copy of the report is available at www.deloitte.com/consumerbusiness .
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