How the cost of living crisis is changing shopper behaviour
By Blackdog - one year ago
The challenges facing British consumers have been well-documented, but we are now starting to see shopper behaviour genuinely changing in a meaningful way. With energy and petrol prices continuing to rocket as well as suppliers and retailers pushing price increases through to shoppers, even more affluent consumers are having to start tightening their belts. And this has started filtering through to shopper behaviour.
One obvious implication will be that many shoppers who shopped discounters less frequently during the pandemic will start revisiting low-price retailers like Aldi and Lidl. The fact that both are continuing to roll out loads of new shops will also succeed in winning new shoppers who have not yet had a chance to shop with them. Not to mention variety store retailers like B&M, Poundland and Home Bargains, all of whom have really ramped up their grocery offering over the last couple of years.
Switching data shows that an increasing number of shoppers are reincorporating discounters into their repertoires, and for those customers who are staying loyal to supermarkets there is mounting evidence that they are trading down from brands into private label or from standard private label into economy. This process is being encouraged by retailers such as Asda, which is rapidly rolling out its new entry level range, and Morrisons, which is using on-shelf signage to exhort shoppers to trade out of brands and into the
Shoppers are also increasingly vigilant for promotions, seeing them as an opportunity to stockpile long-life products for future consumption. A similar logic is also seeing those with adequate disposable income and storage space participate in the bulk sections, which all Big Four supermarkets now offer in a growing number of their stores. However, it is important to remember that shoppers on a really tight budget don’t have the necessary disposable income to invest up front in industrial-sized packs of dishwasher tablets, so both suppliers and retailers should try and ensure that smaller pack sizes are made available to enable hard-pressed shoppers to participate in the category and continue buying the brands that they love.
With more people on the hunt for value, it’s clear that loyalty programmes are also playing an increasing part in the overall value proposition. With Asda poised to roll out its rewards programme across the UK and Tesco continuing to see huge benefit from its Clubcard Prices initiative, it seems likely that Sainsbury’s and Morrisons are going to have to sharpen up their own loyalty propositions to better compete with their peers.
Another unfortunate consequence of consumers being under increasing financial pressure is that shoplifting is going through the roof. Obviously, this is not a new problem for supermarkets, but what they are seeing is not only professional shoplifters accelerating their activity but also regular customers stealing for their own consumption. Shrink prevention is therefore a high priority for the grocers at the moment and stores are becoming awash with signage warning against shoplifting.
More drastic actions – such as spirits and cosmetics displayed behind locked doors, spirits replaced by dummy bottles or laminate pictures, and even humble chocolate bars encased in security boxes – are becoming more commonplace. While these moves might discourage theft, they also have a very strong likelihood of discouraging purchases from genuine customers. So, the tightrope between shrink prevention and sales prevention is one that the supermarkets will have to monitor carefully.
Inflation is also having a massive impact on the supermarkets themselves and we are seeing more initiatives intended to increase in-store efficiency and/or reduce costs. Quite a few of the big supermarkets have flipped from overnight replenishment to filling during trading hours, and while this makes sense from a bottom-line perspective, it’s leading to an increasingly cluttered shopper journey for customers. There also seems to be more of a focus on increasing the efficiency of replenishment, with both Asda and Tesco looking to accelerate their use of pallets in categories such as pasta and canned goods. There are also more retailers – M&S, Morrisons and the Southern Co-op stand out here – who are increasingly using electronic shelf labels: an absolute boon when prices are changing so frequently.
The cost of living crisis will get worse before it gets better, but there can be no doubt that the industry is working incredibly hard to minimise the pain.