The past few months have been volatile for consumers and businesses alike. As consumers grapple with household budgets and look to maximise on savings, many businesses are seeing profits take a hit.
While there had been hopes Christmas would offer some relief, reports have shown an unexpected 1% drop in shop sales. As such, many brands are going into the new year uncertain of what lies ahead, particularly with leaders warning inflation may not have peaked just yet.
Securing customer loyalty is more important than ever, particularly when consumers are wary of spending. But this is no easy feat. There has always been a notion that certain outlets or certain brands are cheaper than others, but research has shown that budget and own-branded item prices have risen by 20.3% and 18.5%. Even budget supermarkets like Aldi and Lidl are scoring highest for higher prices. As such, consumers are finding it more difficult to place their trust in brands, meaning they must do more to keep them on side. Many brands already recognise this – 68% businesses reportedly plan to increase their investments in customer retention.
With customers relying on brands to provide value and make rising costs more manageable, they need to adopt a consumer-conscious mindset that will help them build trust now and into the future. So, how can retailers make sure they stay front of consumers’ minds and first on their shopping lists for the months ahead?
Savings are now standard
Consumers habits are becoming notoriously difficult to predict. Faced with rising energy costs and more expensive day-to-day items, many are reassessing their approach to spending. Consequently, we’re seeing an influx of customers shopping smarter, whether that’s reducing spend on non-essentials, buying second-hand or maximising on seasonal sales and promotions.
Becoming customer-centric
Given the macro-economic challenges facing all organisations, and the supply chain challenges that come with them, retailers can’t discount their way out of this problem, like they may have been able to do before. Price is important, of course, but retailers are now targeting a customer base that can access more transparency via the internet. These consumers are seeing their income drained with a variety of subscription services, who are also increasing their prices and they are much more ‘purpose’ aware, with increasing expectations not only in terms of quality and instant access, but in terms of sustainability and social values.
Predicting consumer behaviour is about recognising what will make shopping a more affordable and stress-free experience. Investment in intelligent automation and data analytics technologies can improve planning, forecasting, delivery and responsiveness, which are all essential components of a well-functioning supply chain that will ensure a brand can serve a consumer where, when and how they need.
Routes to loyalty
Traditionally, smart pricing and promotionshave been the chosen path for retailers looking to attract and retain consumers. By staying on top of consumer shopping trends, retailers can make sure they’re being strategic and targeting promotions towards the most prominent buying habits. Using point-of-sale data management software, brands can further improve their understanding of customer behaviours, whilst also receiving real-time stock updates. Making use of these insights, retailers can identify shopping habits and build customer profiles, helping them deliver services in line with needs. At the same time, by identifying the most popular products amongst customers, retailers can collaborate with suppliers to ensure price consistency. Buying products in bulk, retailers can match prices of previous years and ensure that inflationary prices aren’t passed onto the consumer.
New and innovative approaches to payment systems are also providing an alternative way for consumers to manage costs. With buy-now-pay-later (BNPL) capabilities, making larger purchases can be less daunting by allowing consumers to pay for items in instalments. Through this, consumers can spread spending across a longer period of time, making sure they can balance budgets more effectively. However, brands need to tread with caution here – it has been argued that BNPL has contributed to rising consumer debt and now has the potential to impact credit scores as virtual credit card provider, Zilch, is set to begin sharing customer data with credit ratings agencies. Therefore, brands need to remain wary of this being a truly viable option in supporting consumers with spending.
Consumers want to get the most out of the money they spend, and value-added services are an avenue helping them do this. Adding services to products that consumers can benefit from, such as loyalty programmes and free returns, can increase demand, while also keeping customers on board. For example, Boots offer an advantage card which allows consumers to collect points each time they make a purchase that they can use to pay towards products in the future. At the same time, it also gives them exclusive access to special deals and promotions, both for its own products and for services with partner brands.
Keeping customers onboard
There are still challenging times ahead. With inflation continuing to be at record highs, many consumers are struggling to manage costs. Consequently, buying habits are continually changing as consumers are more wary of what they spend their money on and the brands they choose spend it with. Retailers are having to adapt continuously, and this means adopting a consumer-conscious mindset that puts their needs first and supports a more viable shopping experience for all consumers. The brands that recognise this and change strategy, will be the ones that enjoy continued loyalty in 2023 and the future.
