You only have to turn on the news every night to know we are in a period of high inflation and the cost of living is going through the roof. Retailers are looking at a future of uncertainty as consumers change their habits accordingly. Surprisingly, even though inflation and cost of living increases aren’t new news, retail sales have been in growth since the pandemic. A pent-up demand in households formed the catalyst for the increase in sales as consumers dipped into the savings they tucked away during COVID.
So, what are some of the top issues facing retailers in this challenging period and what are they doing to combat them?
The biggest issue facing retailers is undoubtedly consumer confidence*. The way they live, work, and purchase the things they need. Most economists and retail experts are saying consumers will cut back on discretionary spending and are willing to trade down in price
but not necessarily quality. Retailers will need to plan well and make sure their ranges are adaptable and future fit. We’ve dipped out toe into the market to see what some retailers are doing
Rewarding the not so loyal customers.
As consumers change their shopping habits by looking for cheaper alternatives retailers need to do more to keep their existing ones. Getting any sort of extra value will be welcomed with open arms by the cash strapped consumer. We noticed a large supermarket retailer recently advertised their Budget Booster. Customers will get ten times the points when buying products from participating brands. Getting to rewards like money off your shop faster is a huge incentive and we’re surprised more retailers with loyalty aren’t doing similar things.
Since when have dupes been a thing?
Born on Tik Tok, dupes have become a huge drawcard for consumers as influencers spruik cheaper alternatives to expensive originals. We are now starting to see dupes being used as tactics in retail as they take down their competition, while consumers who are looking at what they spend are seeing a credible alternative.
Shop Smart, Cook Savvy
Inflation is a global problem right now so looking beyond our shores we found UK frozen food supermarket Iceland has launched a series of cost-of-living workshops in partnership with an energy partner to help customers make more than £600 of annual savings as part of its ‘Shop Smart, Cook Savvy’ campaign. The campaign “helped families better understand the cost of cooking, and helped identify the most economical cooking methods available to them to make budgets stretch further”. Given the soaring energy bills in our market it’s surprising that none of the local retailers have picked up on it.
*Inside Retail 2023 AUSTRALIAN RETAIL OUTLOOK