US— Food inflation, which has continued at a persistent trickle over the past several months, has become a full-blown torrent and as food-at-home prices have leapt to record highs a study finds a declining brand loyalty among price sensitive consumers.
The price-sensitive consumer is someone whose buying decisions are driven primarily by price. They will alter their shopping habits as the cost of a product changes, showing more willingness to switch across brands and sizes.
Manufacturers are pushing through their second or third round of price increases in the past year, and weighing at what point consumers will balk. Price-sensitive consumers won’t pay more for an item if a more cost-effective option is available.
A recent analysis of transaction data by Symphony RetailAI of 550 million transactions across 57 million households in North America and Europe found that the most price-sensitive consumers — approximately one-third of all shoppers — are turning their back on the products they have been loyal to and have traditionally purchased.
The company’s Head of HQ Client Delivery and Analytics, Josh McCann in an interview with FoodDive said that consumers’ loyalty to the products they buy and to the grocery channel is changing.
As customers turn to other retailers such as discount retailers to manage their budget, price-sensitive shoppers that find a cost-effective alternative to a brand they typically buy, are more likely to switch to that more affordable product
“With the above-average increase in the items most important to price-sensitive consumers, this group is leaving mainstream grocery for alternative options,” McCann said.
This declining shopper loyalty for retail grocery comes with a reduced share of wallet, and this same risk exists for CPGs of losing market share to competing brands and private label.
McCann added that price sensitivity varies tremendously by category and even among products within individual categories. For example, depending on whether it’s a staple or a discretionary item.
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