Price vs Loyalty

Phil: There's a new study that just came out from PYMNTS. It's called "Decoding Customer Affinity," the customer loyalty to merchant survey 2022. What are the highlights, Sally?

Sally: One thing that we're finding out from this study is that those customers that a store may have loosely held onto meaning, you know, they probably shop at a couple of other stores. In fact, the study told us that, somewhere between 30 and 40% of people shop at up to three stores. So what this study is telling us is that if these stores can't offer the best prices and are going up on their prices, these customers customers are going to leave them and go to the lower price store.

Phil: And it's really very telling, because what we've talked about before is there's a whole bunch of executives, not necessarily from retailers, but from CPG companies who are suggesting that the price elasticity post pandemic or during the pandemic, is a lot different than it was pre-pandemic. And people are willing to pay more. I would frankly disagree with that. I think people are more concerned about prices now tthan ever before, as we're seeing gas prices going through the roof, we're seeing food prices going through the roof. In fact, I just saw this morning that orange juice is up 15% over what it was pre-pandemic. And it's expected to go up another five or six percent  as result of the crop shortage. And it's really going to affect what consumption is. And one other point, which is no surprise, 77% of the groceries in this study report that low prices would improve their loyalty to grocery stores.

Phil: The one thing that I would tell the grocers who are watching this, you gotta have low prices. Yes, it's not gonna improve loyalty. What improves loyalty is having a relationship with your shoppers because the guy across the street can always have a lower price. And if, if price is your total game, it's about relationship ,having a clean store, obviously having innovation and lower prices, not just one thing.