Grocery Retail Gamechangers to Combat Rising Inflation
Grocery prices continue to rise with no signs of slowing, surpassing 10% inflation as of March, 2022. Year-over-year, costs are up across all six major food categories—most notably for eggs (+11%), butter (+14%), beef(+16%), and citrus (+19.5%). In the past, once inflation hit 5%, consumer behavior started to change. Now that 2 in 3 Americans say they are either “concerned” or “very concerned” about inflation, that day of change has arrived.
As a grocery retail leader, you have hard choices to make:
- Like Target and Walmart, you can commit to “keeping prices low,” banking on long-term loyalty to offset (hopefully) short-term losses.
- You could raise prices in line with inflation for higher profits, though revenue will not increase because everything else down the supply chain—from raw materials and fuel to energy and labor—costs more.
- Or, like 56% of retailers, you could raise prices above the level of inflation to boost profits and revenue, but risk losing customers. Most have raised prices by more than 20% since last year. While low-cost retailers like ALDI and Dollar General plan to open hundreds more stores, it’s unclear whether grocers moving in the exact opposite direction will be able to survive.
Food will always be a basic necessity and consumers are still spending. Yet, the squeeze of slow-growth wages, high real estate costs, soaring fuel prices, and a war overseas has consumers rethinking how often they shop, which brands they choose, and which retailers they prefer.
Pricing strategy is just one piece of the puzzle in deciding how you’ll weather the storm. However, customer experience has overtaken price in most cases, as shoppers continue to prove that they’ll pay a premium to retail brands who get it right.
Digital Coupons and Promotions Make Costs Bearable
How Consumer Behavior is Changing: Budget reigns supreme for today’s shoppers. They’re extremely price-conscious—and with good reason. We’re seeing more consumers take advantage of tools and resources to find ways of saving money. For example, many are using retail mobile apps to compare prices, check inventory, clip coupons, and plan shopping trips around special offers. Shoppers are also willing to ditch favorite brands in lieu of better deals.
What You Can Do: Appeal to the budget-conscious consumer by making sure you have a retail mobile app that’s populated with the most recent circular and deals, detailed product descriptions, digital coupons, and the ability to save shopping lists. Work with a tech partner to turn your mobile app into a retail media platform, which allows you to form strategic partnerships with brands who will pay to advertise to your audience, increasing trial and consideration with special offers delivered in-aisle, where it matters most.
Analytics-Driven Loyalty Programs Increase Trip Frequency
How Consumer Behavior is Changing: Grocery loyalty is the most valuable commodity for long-term success. Yet, it can be difficult to maintain if you’re increasing prices at a time when people are looking to save. Shopping frequency tends to decline during inflationary periods with consumers stocking up on non perishables. However, shoppers who are living paycheck to paycheck may actually make more trips.
What You Can Do: If you don’t have a loyalty program or it’s inaccessible through a mobile app, now is the time to ramp up. Consumers who belong to loyalty programs shop more frequently and spend more money per trip. Analytics programs allow retailers to personalize offers to the individual in unprecedented ways. The opportunity to snag exclusive deals and reward offers becomes even more irresistible during difficult economic times when small joys feel magnified. While e-commerce continues to rise, 90% of purchases still happen in-store—driven by loyal customers.
Personalized Digital Ads and Sponsored Products Ease Worries
How Consumer Behavior is Changing: Consumers understand the premium placed on their business in the increasingly competitive retail landscape. They not only want to feel special and valued by the retailers they purchase from, but they want their concerns validated and addressed. When their favorite products are out of stock, they’ll switch stores or brands. If they don’t perceive value in the products and stores they normally shop, they’ll go elsewhere.
What You Can Do: Retailers need to establish a digital ecosystem that will get consumers the deals they’re looking for and the products they want. Personalized digital ads and sponsored products can ease shoppers’ concerns if their favorite items are running low and they need to choose an alternative. Retailers with a fully connected platform will be able to keep tabs one-commerce and in-store inventory to prevent bare shelves with greater efficiency. Worst case scenario, Drop Ship service can allow grocers to inflation-proof their supply chain—quickly and conveniently shipping goods directly to consumers as products suddenly become unavailable, rather than losing the sale to a competitor.
Retail Tech Welcomes Online Shoppers Back to Physical Stores
How Consumer Behavior is Changing: When third-party delivery services initially launched, any associated fees were minimal and considered well worth the cost of convenience. However, inflation and increased gas prices have impacted these delivery services too, and they are now literally passing the buck to shoppers with higher fees. Ultimately, consumers are now heading back in-store to save money.
What You Can Do: Meet shoppers accustomed to ordering online with the latest grocery retail tech. Shoppers love browsing rich product catalogs, watching videos to get inspiration, and saving lists. Retailers can work with a tech partner to augment existing mobile apps with features like click-and-collect (where they order through an app and pickup in-store) or scan-and-go (where they bypass checkout, scanning and paying for groceries with their mobile device instead). While these innovations were once considered nice-to-have features, they’re quickly becoming expected as more shoppers consider mobile devices an integral part of their shopping experience.
Consumer Behavior Is Changing. Are You?
During periods of galloping inflation, consumers spend today before prices rise tomorrow, driving up demand and, in turn, prices. During this difficult time, consumers are looking to brick-and-mortar retailers to lead with grocery loyalty programs, personalized offers, and in-store conveniences to help them get what they need without feeling strapped.
Swiftly has the grocery retail solutions to help you thrive and grow even during periods of runaway inflation. With our simple, out-of-the-box model that includes a retail platform, a mobile platform, retail media, insights and analytics—you can quickly meet the needs of your shoppers without increasing your monthly expenses.
We are committed to helping retailers achieve fast ROI through an innovative partnership that acts as an extension of your in-house team and delivers brand advertising dollars as a new revenue stream.