Technology and Inflation: What Retailers Need to Keep Up
Amid inflation and ongoing supply chain issues, retailers are eager to deliver value—and savings—to shoppers. Embracing new retail technology tools can help them do just that.
It’s no secret among shoppers or retailers that inflation is at all-time high—from food and gas prices to the cost of rent and consumer goods. According to the most recent Consumer Price Index (CPI) report, prices rose 8.5% in March of this year compared to 2021. While inflation tends to fluctuate over time, research shows this is the most significant increase between two years since December 1981.
Between rising fuel prices, supply chain challenges, and the ongoing Russia-Ukraine conflict, these factors form the perfect storm for shoppers: Less savings, low inventory, and higher delivery fees.
To meet the moment and adapt in the face of inflation, retailers need to be proactive—and above all willing to shift their mindset in favor of retail tools and technology that can deliver real value to shoppers.
Now more than ever, that means understanding customers on an individual level, by helping them find personalized discounts and savings, anticipate inventory, and have an above-and-beyond in-store experience that guides them through every step of their shopping journey.
How Does Inflation Affect the Shopping Experience?
So, what exactly is going on? Skyrocketing prices can be attributed to a few key factors, including:
- Ongoing supply chain disruptions, which have been exacerbated by the pandemic and the ongoing Russia-Ukraine conflict (Russia is responsible for exporting a significant amount of oil, metals, grains, and more).
- A spike in demand (and “pent-up demand '' as the pandemic wanes.) Paired with supply chain disruptions, high demand and limited supply leads to rising costs.
- Rising production costs and labor shortages as the price of raw materials or wages go up, coupled with labor shortages across the supply chain, costs inevitably rise.
The effects of inflation are rippling across industries—but no one can feel it more keenly than everyday consumers. As gas prices rise and grocery store trips amount to more expensive totals, consumers are experiencing inflation in three distinct ways:
1. High prices for food and beverage
As many consumers continue to shop in-person at their local brick-and-mortar retailers, they are aware that prices are surging.
Research from Walmart, the largest grocer in the United States, shows that consumers are increasingly attentive to how inflation affects their shopping experience, even if they aren’t actively changing their shopping habits in favor of cheaper brands.
Among the most noticeable changes include shrinking package sizes, less promotions, higher prices for meat, produce, and more. For retailers, the challenge is finding opportunities for savings—and highlighting these to shoppers in a convenient, instantaneous way.
2. Low inventory in the wake of supply chain disruptions
Inventory management is a central part of any brick-and-mortar retailer’s success. A seamless, customer experience requires that retailers know how to stock their shelves strategically to balance online orders and in-store demand.
But in the wake of supply chain disruptions, labor shortages, and the ongoing Russia-Ukraine conflict, brick-and-mortar retailers aren’t able to replenish their shelves as quickly as usual.
Part of delivering a satisfactory in-store experience for shoppers is providing the products they need—when they need them. This requires a new approach that prepares shoppers for product shortages ahead of time, and offers relevant items in the meantime.
3. Higher fees for delivery services
As the cost of food rises, the premiums associated with delivery services inevitably increase as well. For many third-party delivery services, this includes a service fee that covers operating costs, like shopper operations, insurance, background checks, and customer support.
With inflation on the rise, covering these costs requires an even higher service fee that shoppers may not be willing, or able, to afford. What does that mean for brick-and-mortar retailers? An excellent in-store experience is more important than ever, as shoppers will likely avoid costly fees and return to the aisles (which they’re already doing in large numbers.)
How Can Retailers Combat Inflation to Meet Consumer Needs?
Meeting consumers’ dynamic needs is no small feat—but with the right strategy and digital retail tools shoppers and retailers are better equipped to navigate the pitfalls of inflation and disrupted supply chains.
Create a Personalized, Connected Shopping Experience with a Mobile App
With today’s shopper spending five or six hours a day on a mobile device, it’s important that retailers consider the full shopping experience, which often begins long before someone enters a brick-and-mortar store. In fact, a GE Shopper Research study found that 81% of shoppers research their product online before purchasing.
A mobile-first strategy featuring a reliable and intuitive app not only helps shoppers find savings and pricing at their local grocery stores, it engages them from the very beginning of the shopping journey in the pre-purchasing phase.
By connecting the digital experience to in-store, retailers are able to address consumer’s dynamic needs and keep them in the know during a period of change. The best part? Shoppers who engage with a retailer online, in-app, and in-store spend the most and remain most loyal.
Help Shoppers Find the Best Deals—Personalized to their Habits
As prices continue to soar, shoppers are eager to find ways to save.
For retailers, this means being able to effectively communicate with shoppers and speak to their unique needs. If a shopper has Celiac’s Disease, they don’t want to repeatedly have mobile pop-up product suggestions or discount opportunities for foods with gluten.
They do, however, want to find the best deals on their favorite gluten-free muffins or pasta products. Equipped with custom grocery retail tools, retailers can leverage first-party data about their shoppers’ needs and offer personalized discounts that cement customer loyalty in a mutually beneficial way. By establishing a personal connection with shoppers, retailers help drive repeat purchases and long-term loyalty.
Prepare Shoppers for Changes in Inventory
Amid supply chain challenges, shoppers are increasingly aware that their favorite products may take extra time to restock. That said, no one likes going to the grocery store in the hopes of finding their favorite brand—only to discover it’s out of stock indefinitely.
By leveraging grocery retail technology and mobile app features, grocers can prevent this situation and prepare their customers in advance with the following retail tools:
- Intuitive Product Catalog Navigation
A robust product catalog allows shoppers the ability to browse in-stock products in real-time with high-quality visuals, store-specific prices, and detailed product descriptions. That way, they know exactly what to expect before they go out the door.
- Endless Aisle Marketplace
With an extended marketplace, retailers can stop shoppers from resorting to Amazon or Walmart by selling products not carried in stores. By connecting directly to CPG manufacturers for fulfillment, this requires no integration work on the retailer’s end to sell products straight from brands to consumers. This is also a good way to test out new products before making a commitment to allocate shelf space in-store.
Foster Long-term Loyalty
Retailers who express care and concern for shoppers’ individual shopping experiences establish relationships built on mutual trust. For shoppers, a robust loyalty program means rewards and promotions that save them money—and encourage them to make repeat purchases. It also means they can rely on the retailer to consistently deliver new, relevant deals.
Research from McKinsey & Company found that:
- A top-performing loyalty program can boost revenue from customers 15% to 25% annually
- Active loyalty program members spend 10% more than inactive members
- Active point redeeming members spend 25% more than inactive members
Similarly, retailers who partnered with Swiftly to launch a digital loyalty program increased customer store visits by 50% and increased basket sizes by 45% as well.
Embracing Change is Key to Retailer Success
While inflation and supply chain challenges continue to affect brick-and-mortar business, the retailers that prevail will be the ones that shift their mindset and meet shoppers where they are—on their phones and in their local grocery stores.
This is only possible with a robust retail media platform and a supportive grocery retail app that speaks directly to shoppers’ unique habits, communicates effectively about changes in inventory, and highlights opportunities to save when people need it most.
Contact Swiftly today to learn more about how to create a custom retail media network and leverage retail media to deliver consumer savings, foster long-term loyalty, and drive revenue.