Are you sick of hearing about inflation yet? So are your customers!
After two years of a pandemic that had us stuck in our homes, we are now facing record levels of inflation which, in many cases, is resulting in the same ‘staycation’ we all know too well.
Canada’s inflation rate is now at 7.7%—its highest point since 1983, with food prices up 9.7% and fuel prices up 48% over the past year. Unfortunately, for consumer, these high prices are not expected to come down any time soon. This is the first time many consumers, especially those under 40 years old, are experiencing inflation like this. And it's a double whammy for the 40% of consumers who were negatively impacted financially during the pandemic.
So how are customers responding?
According to a survey from Ernst & Young Global, over half of the Canadian population is being impacted by the rising costs of goods and services, and we see impact across all income levels. In response, customers are cutting spending on non-essentials including clothing (40%), beauty/cosmetics (37%) and big ticket items (34%) and opting for low-cost substitutes including private-label replacements for fresh (58%) and packaged (63%).
The survey also found that after two years of pandemic life, consumers are prioritizing experiences over goods even if the experiences have shifted to be closer to home, with 66% stating they prefer at home instead of in-store experiences.
Among inflationary challenges and uncertainty coming out of the pandemic, consumers' priorities have shifted with a higher importance placed on physical health, mental wellness, environmental concerns, social justice and local.
It has been a long two years and our customers continue to be challenged. As grocers, how can we help?
Keep prices in focus. Shoppers need us right now to make it easy for them to find what they are looking for. We know from the research they are making trade-offs and searching for savings. Make it easy for them to navigate and find those deals in store and, more importantly, communicate these deals through out-of-store media, too.
Focus on private label. Who says substituting private label is a trade-off—you just might find a new favourite. Hyper focus on private-label offerings as customers look for these savings to their weekly grocery bill. And if your private-label program is strong they might never go back to their tried and true, creating more opportunity for loyalty to your brand.
Frugal inspiration. We know consumers are spending more time at home, but they also crave experiences. Show them how much fun they can have with adding a twist to the basics with fun recipes and ideas to make this season's entertaining affordable. Liven up that hot dog or have some fun with grilled fruit and bagel kabobs!
Make connections that matter. The last two years have changed us. More than ever, our consumers want connections and experiences—and they want these to align with their values. As a grocer and a brand you have an opportunity to share your experiences with your customers. Share your story, share why you matter, share how you are making a difference, share how your company values align with those of your customer. This changes the conversation from ‘here is my product’ to ‘here is the difference we can make together.’ Check out how we did this with Co-operative Coffee this past Earth Month.