Retailers have plenty of opportunities to grow year-over-year sales comps, even though shoppers seem hell-bent on savings.
Retailers have plenty of opportunities to grow year-over-year sales comps, even though shoppers seem hell-bent on savings. ‘Impossible’ according to today’s headlines, but ‘probable’ with the deeper study of where people are compromising and where they won’t.
For example, Americans at all income levels are refusing to sacrifice quality, value and nutrition to save money on food and health and beauty care purchases. What’s in play instead? The brands they typically buy, the stores they frequent, and the packaging form they prefer.
So finds a new IBM study of 4,000 U.S. residents spanning income levels from under $20,000 to more than $100,000 annually. Even after a year of economic pummeling, three out of four (72%) are more concerned with quality than price in the supermarket. That behavior will likely stay true into the future: nine out of 10 say that value and nutrition will be of equal or greater importance once the recession ends.
Looking at products:
Meat, poultry and coffee top the list of the single item shoppers don’t want to relinquish. Yet they are willing to spend less on prepared foods, single-serve beverages and clothing.
How would they spend an extra $10?
• Dessert is the most popular splurge, across all income groups.
• Among people earning less than $45,000 annually: 13% would buy more convenient versions of foods they already buy, such as pre-cut vegetables (vs. 9% of those with higher incomes).
• Among people earning $45,000 or more: 19% would buy more natural or organic versions of items on their shopping list.
Looking at savings behaviors:
• Two out of three (68%) say nutrition is their #1 concern when food shopping.
• Half (52%) are buying smaller volumes of food at the supermarket.
• Half (49%) shop at more stores now to ‘get the best deal.’
• One in three (35%) have changed grocery stores to save money.
• Of people earning less than $20,000 annually, 45% want foods that keep them full longer.
To us, insights like these (as well as the deep consumer and category-level insights that CPG manufacturers have and would like to share with retailers, if they could only get seats at their tables) are the guideposts that will more fully connect stores with the customers they’d really like to keep. Price is a critical part of the picture, for sure, but so is the spectrum from nutrition to indulgence.
Which is why when chains such as Giant Eagle, Loblaw and Albertsons grab attention with expansive price cuts across their selling floors, we figure they’re attracting cherrypickers to their stores who have no loyalty—and simultaneously they may be raising doubt among their loyalists about whether quality or services might be compromised. Wishes aside, everyone knows that nothing comes for free.
Therefore, we suggest that retailers work on their full complement of appeals. Price appeals could be more effective when presented as affordable, not cheap—and as part of a marketing platform aligning as well with consumers’ interest in better health, and in more enjoyment of their food shopping and consumption experiences.