We’re not through the woods with price inflation yet, but if you keep in mind what true
value is, you might discover fresh approaches to satisfy shopper demands.
Prices continue to rise
The rate of grocery price inflation started to slow down towards the end of last year, but this relief didn't last long.
In the latest Kantar read, grocery price inflation hit 16.7%, breaking the previous record from October 2022. January has seen grocers increase prices across 6% of their range, with Asda seeing the largest overall number of rises. This means if households don't alter their behaviour, their annual grocery spending will increase by £788.
Price remains at the heart of retailer comms, as Tesco centre their 3 core mechanics (Low Everyday Prices, Aldi Price Match and Clubcard Prices) in their latest “We want you to spend less with us” advert.
Despite all this action on price communication, Aldi come out on top for “best prices” and “best value for money” in Kantar’s customer satisfaction data. But what does “value for money” really mean to shoppers?
Value means different things to different people… at different times
1. Quality is at the heart of what people consider good value for money.
If you buy the cheapest option but the quality is poor - it’s not good value for money. Communicating the quality of your product is more important than ever. Superdrug are focussed on communicating the quality of their own label products with their “Lower the Cost of Living Campaign”. Whether you’re a value brand or a premium brand, you need to show people what makes you good value by calling out your quality credentials.
2. Absolute Price is important as many savvy shoppers are shopping around more looking for the best value.
This is why Tesco, Sainsbury’s and Asda focus on their price match initiatives so much. Many shoppers aren’t willing to pay more for something they know they can buy elsewhere for less. Price Match initiatives are able to trigger an immediate purchase but run the risk of subliminally reminding people about the discount retailers. If your products are being price matched, make sure they are being highlighted to help drive those purchases! (Price is always at the discretion of the retailer)
3. Price per KG/Litre/Use becomes more important as shoppers look for ways to save.
If shoppers can afford to, they will look to save money by stocking up on bigger packs offering better value. Many shoppers consider the price per KG, Litre or use when comparing across brands and pack sizes. It’s key that retailers offer options across the price-pack hierarchy remembering that not everyone has the money, storage space or means to carry these larger pack formats.
4. Promotions are the preferred coping mechanism for shoppers across many categories.
Most of us don’t want to compromise on what we buy or where we buy it. Promotions give us permission to buy something without compromise because we are getting a bargain! Promotions are key to offering great value, but we run the risk of looking too cheap if we promote too often or too deeply. To find out more, check out my post: 5 things you should know before you plan your next promotion
What’s right for you? The best thing you can do for your brand is to understand who your shoppers are and how they are changing their behaviour to cope with a squeezed budget. Most brands need to incorporate a combination of these options and work with retailers to ensure they are meeting all these needs for their shoppers.
Please get in touch if there is anything we can do to support you or your business.
Stay safe, well and positive!
Ella
P.S. Let me know if there are any hot topics you’d like me to include in the next issue!
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