Pricing and promotions sensitivity soars as consumers tighten their belts during the cost-of-living squeeze, the latest research from Retail Insight, the leader in retail execution, reveals.
Original research of over 1,000 UK shoppers by Retail Insight showed that now two thirds (65%) have become more price conscious since the start of the pandemic when shopping for groceries, rising to three quarters (74%) of 18–24-year-olds. Meanwhile, rising inflation has caused a further 69% to become more budget conscious as the cost-of-living crisis has escalated, rising to 73% of those aged 25-34 years old.
With ongoing disruption to global supply chains, still upended from the pandemic but made more volatile by the war in Ukraine, UK shoppers’ heightened sensitivity to prices comes as the cost of food, fuel and energy continue to rise sharply. Food and drink industry experts warn food costs could soar by 15% this year – while inflation jumped to 6.2% in February, a new 30 year high, and is expected to top 8% by autumn, putting pressures on the nation’s pockets and threatening the worst drop in living standards since the 1950s.
With over two thirds (66%) of the UK shoppers polled by Retail Insight trying to reduce their food bills to lessen their cost-of-living, a further six in ten (60%) now actively seek out promotions and discounts when shopping for groceries. Meanwhile 64% say they are now much more likely to compare prices at the shelf-edge in order to keep food bills down.
And this pricing and promotions sensitivity is causing customers’ loyalty – both to the brands and the supermarkets they shop with – to come under threat. Over half (52%) of UK consumers say they had switched from branded goods to own-brand lines when shopping for food in a bid to keep their grocery bills down.
Two fifths have even switched supermarkets in an attempt to battle rising food prices, with Kantar’s latest figures showing that the Discounters were taking market share away from the Big Four; its latest data in March showed 1.3million more customers had switch to Aldi and an extra 1million to Lidl compared with the same period in 2021. And just this week Tesco used its annual results statement to affirm its continued commitment to offering value on price, extending its Aldi ‘Price Match’ guarantee and Clubcard discounting, as well as relaunching 1,600 Low Every Day Price items.
Paul Boyle, CEO of Retail Insight, commented: “Faced with rising costs across every aspect of their businesses – from supply chain volatility and rising costs of production through their supplier networks, to the cost of running store operations or offering online deliveries – grocers face complex and multifaceted challenges when it comes to pricing and promotions in the current economic climate. However, this looms all the larger when you consider that less than 50% of promotions are currently implemented to plan, meaning hard fought margin-gains could be left on the table, at a time when margins are being squeezed in every direction. By using data to pinpoint compliance issues around promotions, retailers can use these insights to quickly and effectively address and optimise pricing and discounting, to make sure promotions pay – both for the retailer and for the shopper.”