Inflation-weary shoppers center price over brand loyalty
Editor’s note: Sam Killip is vice president of customer success at Attest.
The biggest brands in America are feeling the impact of inflation and the cost-of-living crisis on long-established consumer behaviors. New research shows shoppers are moving away from household names and putting private-brand goods in their baskets.
While food and beverage brands may find this hard to swallow, they should be further worried that many Americans plan to stick to their new diets when inflation eases. According to data from the latest Attest U.S. Food and Beverage Trends Report, 73% of consumers would now stick with private-label brands, regardless of price.
However, marketers and researchers working for supermarkets and retailers might find the report more to their taste, with own brands such as Target's Good & Gather, Safeway's Safeway Select and Walmart's Great Value eating away at the popularity of bigger brands. More than 58% of Americans say they are "very likely" to purchase these cheaper alternatives, with a further 27% "somewhat likely.” Only 4% of Americans wouldn't consider buying private-label brands.
The major concern for household-name brands that can't compete on price is that these shifts in shopping habits may be permanent for several important sub-segments. Of these, 34% say they will "definitely" carry on buying private-brand goods, while 39% say they will "probably" keep them in their shopping baskets. Only 9% aren't planning to stick with these lesser-known brands long-term.
Pursuit of value wins over brand loyalty
In this inflationary climate, shoppers are putting the pursuit of value above all else when stocking their cupboards. Nearly nine out of 10 (89%) consumers say they are bargain-hunting when grocery shopping, with 41% visiting multiple supermarkets in-person to find the best deal and 33% carrying out their price analyses online.
Some Americans even admit that inflation has caused them to give up shopping at specific supermarkets because of high prices or lack of deals. The chains most likely to be named were Walmart, Publix and Whole Foods. The lesson for grocery chains is that they need to offer better deals than other retailers to attract consumers or extend their own-label product lines to boost their appeal to inflation-weary consumers.
Shoppers focus on price
Shoppers aren't that interested in high-tech in-store gadgetry. When asked to select the top incentives that attract them to shop at one particular supermarket, technology such as smart carts and scanning apps ranked last. Retailers would do well to put investment in this area on the back burner and focus instead on pricing.
In the same question, lower prices ranked as the most important factor when choosing where to shop. This option was four times more popular as the top choice than special offers and promotions, which ranked second. Personalized special offers ranked third, with loyalty schemes in fourth place.
Discounts deliver for inflation-weary consumers
Out of six different promotion types, discounting the price of a product is what respondents wanted the most, closely followed by buy-one-get-one-free deals. Receiving extra loyalty points was deemed to be the least attractive offer. The report delved into just how significant discounts need to be to attract shoppers, with the most popular answer being a 20% discount, demanded by 29% of people. A further 21% said stores would persuade them to buy with a 30% discount, while 19% of consumers were happy with a discount of 10% or less.
Brands that might be considering cuts to their marketing budget to cut costs should pause for thought also; scrimping on advertising could be a false economy. According to the research, 58% of consumers who shop around for food and beverage deals rely on adverts to stay informed. Promotional emails and mailings are also effective for reaching bargain hunters at 40%. Social media was the least effective channel for keeping customers informed about pricing, at 11%.
Brand loyalty on the line
While this research will give household name brands and retailers plenty to chew over, there's no doubt that some of the brands considered staples of the American diet could soon be nearing their expiry date if they don't act fast.
American shoppers have changed their behavior and acquired a real taste for private-label brands due to inflation's impact on the cost of grocery and household products. Big-name brands need to give consumers new, compelling reasons not to switch to their private-label counterparts and take actions to motivate shoppers to come back to their brands.
All figures within this article are taken from research conducted on the Attest platform. The total sample size for the 2023 U.S. Food and Beverage Trends Report was 2,000 nationally representative working-age consumers based in the United States. The survey concluded on January 11, 2023. The full report can be found here.