Pricing and promotions sensitivity soars as consumers tighten their belts during the cost-of-living squeeze, the latest research from Retail Insight reveals.
Original research of over 1,000 US shoppers by Retail Insight showed that now over two-thirds (68%) have become more price-conscious since the start of the pandemic when shopping for groceries, rising to three quarters (74%) of 25-34-year-olds. Meanwhile, rising inflation has caused a further 74% to become more budget-conscious as the cost-of-living crisis has escalated.
With the ongoing disruption to global supply chains, still upended from the pandemic but made more volatile by the war in Ukraine, US shoppers’ heightened sensitivity to prices comes as the cost of food and energy continues to rise sharply as U.S inflation rose to 8.5% in April, a 40-year high, rising at its fastest pace since 1981.
With over two-thirds (65%) of the US shoppers polled by Retail Insight trying to reduce their food bills to lessen their cost of living, a further 65% now actively seek out promotions and discounts when shopping for groceries. Meanwhile, almost seven in ten (69%) say they are now much more likely to compare prices at the shelf edge in order to keep food bills down.
And this pricing and promotions sensitivity is causing customers’ loyalty – both to the brands and the supermarkets they shop with – to come under threat. Over half (56%) of US consumers say they had switched from branded goods to own-brand lines when shopping for food in a bid to keep their grocery bills down, while 43% have even switched supermarkets in an attempt to battle rising food prices.
Paul Boyle, CEO of Retail Insight, commented: “Faced with rising costs across every aspect of their businesses – from supply chain volatility and rising costs of production through their supplier networks, to the cost of running store operations or offering online deliveries – grocers face complex and multifaceted challenges when it comes to pricing and promotions in the current economic climate. However, this looms all the larger when you consider that less than 50% of promotions are currently implemented to plan, meaning hard-fought margin gains could be left on the table, at a time when margins are being squeezed in every direction. By using data to pinpoint compliance issues around promotions, retailers can use these insights to quickly and effectively address and optimize pricing and discounting, to make sure promotions pay – both for the retailer and for the shopper.”