We’ve talked about the most pressing challenges grocers are facing at the moment in our latest expert round-up. One of those issues was the rising inflation which is cousins the cost of living to increase fast.
In this article, we are going to focus on how the rising costs are impacting shoppers' behavior. Also, we are going to offer some tips and tricks on how retailers can support shoppers during these difficult times.
Rising inflation and the cost of living
The consequences of the COVID-19 Pandemic and the war in Ukraine are showing in the rapid increase in inflation. Since the end of 2021, prices have started to increase. Now, inflation is at its highest in the last decades in most countries, including the US.
This, of course, has a big impact even on essential products like groceries. While shoppers might be able to postpone purchasing electronics or clothes, it is impossible to postpone buying food. Food prices have been increasing for months and it doesn’t seem like this trend is going to end anytime soon.
How is the rising cost of living impacting shopper behavior?
As you might expect, this crisis hasn’t gone unnoticed by shoppers. Actually, Ipsos survey data shows that roughly 80% of Americans altered their behaviors because of higher prices. How are people coping with higher prices? Here are just a few changes shoppers have made in the past few months:
1. Buying more in one trip
To save up on gas and find better discounts, more shoppers have been shopping in bulk and buying more products in a single trip to the store. This, of course, has a big impact on impulse purchases. Fewer trips to the store mean fewer impulse buying opportunities for retailers and brands.
2. Focus on essentials
People are no longer splurging and they are focusing more on purchasing the essentials. Food, personal hygiene products, and household cleaning products are on the top of the list, leaving out snacks, alcohol, and other non-essential products. This means that high-end brands might see a drop in sales during this critical period.
3. Trying to save up
Shoppers are looking for more ways to save up. Depending on the store and the products they want to purchase, customers might use coupons, join a loyalty program, or buy in bulk to benefit from BOGO promotions. This change in behavior shows that it is a good time to focus on in-store promotions.
4. Switching brands
Another important change in behavior is the fact that shoppers are switching brands. Brand loyalty seems to be out the window when the prices continue to soar. An important change customers are making is purchasing more own brands, instead of buying from well-known brands. This can be seen as an opportunity to promote your own brand of products.
How to support shoppers during this crisis?
Now that we’ve seen how the rising cost of living is impacting shoppers and how it is changing their behavior, it is time to focus on what you can do to support your loyal customers. While sales are important, customers will appreciate seeing that you care about their needs and are willing to make some changes to help them save up when they shop in your store.
1. Be transparent with shoppers
While shoppers understand that prices are going up due to the rising inflation, this doesn’t mean that you should increase the prices more than you need to. In our latest expert round-up, Nicole Leinbach Reyhle shared a great point of view regarding this issue:
“There is a lot of power in communication and building trust among customers. As costs rise, being transparent to consumers on when sales are approaching, where savings may be gained, and how alternative products can deliver similar or same results are less expense and more will mean a lot to customers.”
Nicole Leinbach Reyhle, Founder of Retail Minded
2. Loyalty programs
Now it’s a great time to implement a loyalty program. It is a win-win situation: Shoppers receive discounted or even free products and you get more loyal customers to whom you can market later on. Don’t overcomplicate the loyalty program and try to make it digital to be easier for both you and your customers.
3. Offer coupons and reward programs
Another great way in which you can help customers save up money while shopping is to offer coupons or implement a rewards program. While most shoppers won’t spend time hunting for coupons, offering them in your weekly brochure or on a mobile app might make it easier for customers to use those coupons. Many times when shoppers see that coupons are available they will stock on those products to benefit from the small prices.
Bill Glaser, one of the experts we’ve interviewed for our expert round-ups, mentioned:
“Grocery retailers will retain more customers and boost sales if they offer desirable coupons and establish a rewards program.”
Bill Glaser, CEO of Outstanding Foods
4. Offer a near-expiration discount
As you already know, the best before dates are not used to show exactly when the product it’s going to go bad. However, most shoppers and retailers use them as a guideline and a lot of good products go to waste. Considering that retailers generate 10.5M tons of surplus food and nearly 35% of which goes to landfill this type of discount could benefit everybody.
When you implement this type of discount make sure to clearly state the expiration date and the discount. Prepare a special place where you can put these products so that customers can spot them easily.
5. Focus on own brand
Private-label brands are no longer the most sought-after by shoppers. Instead, in an effort to save up money, customers turn to retail own-brands. If you have your own brand, it’s time to make those products stand out.
You can promote them with an innovative POP display like Tokinomo. This is exactly what Auchan did for their brand of coffee in this brand activation:
It might also be a great time to create a special line of products that have a lower price. For instance, Asda is one of the first retailers to launch a line of products that have a small price and contain essential items.
Showing support goes a long way
During these challenging times, it is important to show your customers that you understand them and that you care about their needs. While it’s impossible to freeze the prices and sell at a loss, we’ve given you a few tips and tricks that you can use to show support.