Persistent inflation has sparked significant behavior changes across American income groups. The ongoing budget pressures have resulted in consumers walking away from some categories and/or trading down the brands they buy.
A deep understanding of consumers and what drives their decisions in their purchase journeys is critical for Brands to retain their consumers and grow.
🤷 EVOLVING CONSUMER BEHAVIOR: Deloitte research (Feb'23) found American income groups are making changes to manage their financials: 🔹 Low-Income: Embracing cost-saving measures, they opt for store brands and cheaper proteins, prioritizing necessities and maximizing value. 🔹 Middle-Class: Diligently utilizing everything in their pantry, they plan shopping trips to minimize waste and be efficient. 🔹 High-Income: They remain slightly frugal but indulge in "nice-to-have" items while seeking value in purchases.
Deloitte notes, "The one budget-friendly practice high-income shoppers do more than other income segments is take extra time to plan their shopping trips... Yet, most say they also buy as much food as they want and often splurge on extras.
Meanwhile, 30% of low-income shoppers say they leave stores with less than they wanted."
🔀 NATIONAL BRANDS FACE RISKS:
Store brands grew 2X rate of National brands as people traded down
(+11% vs +6% in $ growth 2022 vs 2021 (PLMA).
While both national and store-brand sales benefited from price increases, both sold fewer units. This highlights the risk of consumers walking away or eroding loyalty amid continuous cost pressures. History has shown that once consumers switch to private labels, they tend to stick with them if they find acceptable quality and taste, along with, of course, their price advantages.
✨ BRAND OPPORTUNITIES: Brands must proactively mitigate the risk of losing customers to private labels, with the highest risk being in commoditized categories. Categories like pet food, snacks, and coffee are more resistant, where criteria like convenience and taste heavily influence brand choice and loyalty. To thrive amidst inflation, brands must deeply understand their target consumers and their journeys. By leveraging consumer journey insights, brands can craft strategies that emphasize value, demonstrate empathy and foster innovation. They can more effectively market offerings at their consumers’ critical decision-making touchpoints.
Reach out to discuss how journey research can help you grow your brand!