As inflation and supply chain issues have taken a toll on consumers this year, CPG brand loyalty has taken a beating of its own. And with continued uncertainty about where those external factors are headed, price and availability have become more important to many shoppers than buying their favorite brands. That makes it more critical than ever for brands to stay top-of-mind with their best customers to keep them buying their products.
Lower supply, higher prices
Earlier this year, suppliers were struggling to fill shelves with their customers’ favorite brands. As a result, brand loyals were forced to choose other options to fulfill their needs. In an 84.51° Insights study conducted in July, one-third of shoppers said they will buy a different brand if their intended item is out of stock.
More recently, inflation and higher prices have also had a major impact on what customers are buying. Our October survey about shopping concerns found that 65% of customers are extremely concerned about Inflation.
Categories at risk
In response, many shoppers are leaving their favorite brands behind. In August, 50% of customers said they have switched to a lower cost brand. The biggest trade-down risk areas include Shelf Stable, Household Cleaning and Paper products, with 50% of respondents saying they’re willing to switch to lower-price brands in these categories.
There were also notable increases (six percentage points or more) in respondents citing this willingness to switch brands in Dairy, Frozen Foods, Drinks and Pet Food compared to September. In addition, 21% of households with income less than $100k are switching from fresh to frozen, and 18% are switching from deli to packaged meat. Breakfast is also being impacted, as shoppers seek cheaper coffee and bars.
Retention is more important than ever
These shifts have made it crucial for brands to focus on retaining their loyal customers. While bringing new customers into your brand is important to its health, it costs more to acquire a new customer than it does to maintain an existing one. In particular, protect your brand “loyals” from leaving. Our loyal customers typically spend 10x that of an average customer. While counterintuitive, our studies have shown that focusing on your existing loyals drives incremental sales.
Establish a consistent relationship with your best brand buyers through communications, sales, and rewards. Rewarding your best customers drives incremental sales and trips that otherwise would not have happened or could have gone to a different brand.
Make it personal
When looking to reach your most relevant customer groups, leverage 1:1 personalized offers and rewards on items your customers buy regularly. These tools, whether digital or print, increase share by driving incremental visits, units, sales and loyalty — making them the most effective vehicle for maintaining current buyers in the face of constrained budgets.
Other tactics to drive retention include an always-on online strategy and full funnel campaigns during key time periods. With more grocery shoppers relying on coupons to offset price increases (our research found 64% of consumers say they’re looking for sales/deals/coupons more often), targeted digital coupons are an active, intentional, consumer-need-based solution that can also help you preserve loyalty and gain market share while navigating this challenging landscape.
While inflation and product shortage have disrupted buyer behavior, one silver lining for grocery products is that consumers are eating more food at home vs. restaurants. While job one is to protect your base, this provides the opportunity to attract new consumers and gradually convert them to brand loyals.
About Becky Elderidge
As VP of Business Development Consulting, Becky Eldredge is responsible for driving accelerated growth for Kroger's industry-leading commercial loyalty portfolio. She founded the company’s Consulting function and turned its loyalty marketing business to a growth business for the company.
84.51° is a retail data science, insights and media company helping The Kroger Co., consumer packaged goods companies, agencies, publishers and affiliated partners create more personalized and valuable experiences for shoppers across the path to purchase.
Powered by cutting edge science, we leverage 1st party retail data from nearly 1 of 2 US households and 2BN+ transactions to fuel a more customer-centric journey utilizing 84.51° Insights, 84.51° Loyalty Marketing and our retail media advertising solution, Kroger Precision Marketing.