Shoppers are seeing relief in gas prices and grocery prices have flattened, but high healthcare and housing prices are causing shoppers to remain frugal, according to Chip West, Retail and Consumer Behavior Expert at Vericast.
He expects grocery sales to remain flat if prices remain high, with consumers looking across different channels to save money on food.
“As fuel prices continue to lower over time, more consumers will likely spend that savings on other essential categories, including grocery,” said West. “This should give grocers who pull consumers in with attractive savings offers an opportunity to capture additional sales. Consumers may be more open to potentially treat themselves and/or their families to products or categories they previously have cut back.”
BRAND LOYALTY WANING
However, West warned that brand loyalty has “waned dramatically” in the grocery space. Shoppers’ continued emphasis on value means that grocers shouldn’t just be focusing on low prices for high-demand items, but also on items that offer great value for the cost and a strong selection of alternatives.
That also means looking beyond the aisle when it comes to informing shoppers about what deals you have available.
“Right now, loyalty is basically non-existent, and consumers are looking across a variety of retailers for the best deal,” West said. “Knowing that comparison shopping is elevated, grocers should be promoting and promoting frequently in all the places where consumers look – this includes in print and online.
“Any pause in conveying promotional activity, including deals and offers in the places shoppers are inclined to look, can eliminate that retailer from the consumers’ consideration set. We’ve seen that retailers that stop being in front of consumers on a frequent basis see their traffic and ultimate sales decline, while other retailers took share gains,” West added.
SHOPPERS WILLING TO TRAVEL AROUND TOWN
Value-seeking behavior was already popular pre-pandemic, and inflation has made it even more common. That has resulted in consumers becoming willing to explore multiple potential destinations to find savings.
As a result, emails and apps from trusted retailers need to offer up-to-date, relevant and consistent offers and deals to ensure they remain top-of-mind with existing customers.
West also expects some stickiness from shoppers who “trade down” to discount and dollar stores even after inflationary pressure passes. This makes it even more important for grocers to get out in front of their customers with good deals and stay there – shoppers won during this difficult time can rebuild their loyalty with you as their preferred grocer in the future.
“Competition for consumers’ food spend is fierce, especially as inflation has significantly impacted fuel and food prices,” said West. “Grocers who are consistently ‘present’ in the minds of consumers and convince them that their stores are indeed a value and savings destination will have a better chance to retain and win back shoppers.
“Furthermore, grocers promoting frequently can also cement themselves as a value and savings destination [which] also enhances their opportunity to gain more shoppers who may not have considered them in the past.”