In times of economic hardship, spending on essential goods tends to become a larger piece of the household budget. When it comes to food, cost-conscious consumers forego luxuries such as dining out to instead cook more meals at home.
While inflation has begun to cool in recent months, consumers are still playing defense with their spending, causing many shoppers to re-evaluate their monthly grocery bills. The problem, however, is that grocery prices have increased 13.5% year over year, outpacing the already high average inflation rate in 2022.
Rising costs have affected grocers more than almost any industry. Marketers will need to shift their tactics to reach thrifty consumers. It's time to strike an empathetic tone in your communications. One that prioritizes convenience, promotes loyalty, and highlights the underlying value shoppers are looking for.
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Reaching Cost-Conscious Customers
More than 70% of consumers now notice higher prices at the grocery store, which has added kindle to the fire started by gas’s rising cost per gallon. Because of that, almost 30% say that they would try to reduce their grocery bill in 2022.
When economic times are tight, marketers must reach consumers with campaigns that appeal to their wallets as much as their sense of taste. In April 2022, 41% of consumers say they would switch to a grocery store’s private label over a national brand. Brand recognition seems to be less important during inflationary periods than the cost of goods.
As an alternative to national brands, showcase the value of private label offerings. For customers who have already shown a willingness to try store brands, encourage exploration of offerings in other categories.
What other tactics can marketers use to reach newly-cost-conscious consumers? One national grocery brand wanted the flexibility to present customers with sensibly priced inventory. The marketing team worked with Movable Ink to develop a custom email app that connected to an existing API. This allowed marketers to adjust emails to show the most relevant weekly offers, saving the team time and the brand’s customers money.
Grocery Shoppers Embrace Buy Now, Pay Later
Grocery marketers are now looking for creative alternatives to help their customers through the difficulties of rising food costs. One possibility is the introduction of Buy Now, Pay Later (BNPL) for food-related purchases.
Research from PYMNTS and Melio found that 22% of grocers offer BNPL, while another 25% expect to implement the payment option in 2023. Not only does it help shoppers spread the cost of food, data suggests that the average basket size increases between 75% and 92% when consumers use BNPL at checkout.
Providing Convenience for the Busy Consumer
The unfortunate reality of economic hardship is that everyone tends to become either busier or more stressed out. Many people rely on the internet to help make a few of life’s tasks easier, which is especially important when feeding a family. This may be why 29% of consumers say that they chose online shopping because it saves them the time and effort required to shop in-store. Another 23% said that online grocery shopping makes it easier for them to shop when it’s convenient for them.
Marketers now have the opportunity to encourage more online shopping. This allows marketers to better understand their customers by accessing more first-party data to use in later personalization efforts. It also provides consumers with the ease and convenience they are searching for.
Create a more convenient shopping experience for customers by highlighting the options available to them at their local or preferred store, such as curbside pick-up or delivery. Better yet, dynamically display available time slots for their location in your messaging.
Another way to highlight convenience is by providing shortcuts that can easily help them find and prepare meals. According to the food institute, six out of ten people feel burned out by the experience of cooking at home.
The pandemic took its toll on everyone. Now inflation is possibly keeping people out of restaurants, even though many consumers are still feeling burnt out from searching for recipes and cooking at home.
This is where marketers can offer tangible value in the form of shoppable recipes. Brands such as Today and Instacart are already creating these recipes. They offer not only a simple family meal to cook, but links to online grocery orders to make food ordering quick and easy.
Revitalizing Customer Loyalty
Another hard truth for marketers during times of economic uncertainty is how quickly customer loyalty declines. From a consumer standpoint, it makes more sense to spend a little more time searching for the best deal than relying on the same products from the same grocery store every week.
McKinsey & Company found that 45% of consumers planned to explore more ways to save money now that inflation is cutting into budgets. More so, 68% say their loyalty is more difficult to maintain than ever before. Loyalty isn’t dwindling simply because of the economy, though. The internet has made it easier for people to shop around for different products. But it has also made the process of deal discovery more time-consuming.
Data-driven loyalty programs can help marketers stem the tide of shoppers looking for the best deal. Done right, these programs can promote lasting relationships between grocer and customer by highlighting the benefits of shopping at one brand. In fact, 43% of consumers spend more at grocery stores with loyalty programs.
Hyper-personalization can provide essential value for customers. This allows brands to encourage loyalty even at a time when budgets are shrinking. Every single digital interaction should be 1:1 personalized to a customer's individual rewards information, frequently purchased items, and more. Customers want convenience as much as anything and providing the information they need to quickly make cost-conscious decisions can keep them from looking elsewhere for the best deals.
Conclusion
There is no avoiding inflation and all its consequences. However, rising prices don’t have to mean less customer loyalty. By creating a digital marketing strategy that prioritizes 1:1, data-driven personalization, digital marketers can highlight value in the face of inflation, provide convenience to burned-out shoppers, and maintain the loyalty of their customers.
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