Why grocers should invest in price now to win long-term loyalty

Nick Leyland
6 minute read

The grocery industry is undoubtedly a bellwether for the impact of the cost-of-living crisis on consumers. While costs are rising in many places, the price of everyday basket essentials remains a proxy for inflation. 

That puts grocers at the epicentre of the debate when it comes to how and whether they should be looking after their customers in such challenging times. 

Every grocer is battling rising operational costs, from the increasing energy cost of keeping freezers and fridges cold through to the price of fuel for home deliveries. How can brands still support their customer base through tough times, while still protecting their bottom line? 

Invest in essentials to support tighter budgets

Cardlytics spend data across 24 million UK bank accounts shows that since 2020 the average cost of the weekly shop has increased by 20%. The rising pressures of inflation, supply chain issues and labour shortages are all forcing the price of everyday essentials up. 

A recent Cardlytics poll of 2000 UK adults found that almost nine in ten (88%) consumers have seen a rise in their weekly shop. As wages stagnate, and bills look to skyrocket, they’ll be searching for any way possible to save a little extra cash.

Use loyalty schemes to engage customers

One option is to increase investment in the basics. Asda’s launch of a new essentials range is one example of how a brand is stepping up and keeping the price of essentials low.

But with cost now becoming a clear deciding factor in where to spend, consumers are increasingly shopping around to save the pennies. Our spend data shows that in the past year, total spend at the big four supermarkets fell 7% and spend at convenience stores fell 8%, whilst discount supermarkets managed to uphold their market share in an increasingly competitive industry.

A new basics range might help at one end of the spectrum, but if consumers are then shopping elsewhere to fill the rest of their basket, how much is it really helping?

With over 56% of consumers saying they’re looking to shop with cheaper brands to save money, grocers should consider how they can make customer loyalty the priority. Investing in loyalty programmes that help customers save money on their shop – be it offers on the items people buy most or rewards each time they shop – will go some way to help grocers hold on to their customers and attract new ones.

Cardlytics is able to provide brands with a ‘whole wallet’ view, to understand what share of a customer’s category spend they’re receiving and how much headroom a customer has to make sure they’re targeting the most relevant and valuable customers.

Invest in price, play the long game

Every grocery retailer faces an ongoing battle to support their customers, however, as the cost-of-living ramps up, it’s crucial that additional costs aren’t passed on to the consumers. Otherwise, brands risk losing their loyal customer base and may struggle to defend their market share – especially in the run up to the all-important ‘Golden Quarter’. 

By investing in price now to support customers when budgets are tight, grocers can win longer-term brand loyalty for helping customers when they needed it the most.  

Those brands that step up to support customers now, will reap the rewards in the long term. 

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