(Business Insider) Inflation is changing everything about how Americans grocery shop, from what stores they visit to the brands they buy and how frequently they shop, and no amount of marketing will make up for brands that are raising prices.
According to Business Insider “, approximately 95% of U.S. households said they are making changes to purchasing habits to account for rising prices, according to a Numerator survey of over 10,000 consumers in April. About half of those surveyed said they’ve stocked up on essentials when they were on sale and searched for coupons and discounts in recent months. In both cases, a higher percentage of consumers said they plan to adopt those behaviors in the upcoming months.”
Over one-third of Numerator survey, respondents said they are purchasing fewer items than they have in the past, and 54% said they plan to cut spending, citing non-essential food as one of the top categories they intend to slash.
Grocery items are not the only things consumers are starting to pull back on. The Washington Post said, “more Americans are beginning to hold off on booking flights, getting haircuts, building backyard pools and replacing old leaky roofs — in some of the new signs that the consumer engine of U.S. economic growth could be losing steam.”
Brands that don’t consider financially strapped consumers are hiding from reality. It’s been reported that the price of gas could go up even higher, and shrinkflation is being noticed and complained about by angry consumers.
Can advertising help? Absolutely if brands are honest with their audience and explain what’s happening. Despite rising costs, for example, Target has decided not to raise prices on many of its products and absorb the costs. Other brands, however, are not only increasing prices, but they’re making record profits as well. Sorry but advertising your product when the media reports you just had a record quarter in profits will lead to brand defections.
In the meantime, I have heard from several sources that grocers are busy resetting their shelves because demand for some brands has dropped off a cliff. One broker told me, “it was a massive mistake to raise prices in a category with so much competition because we are losing volume share.
There are signs that we’re headed into a recession. Retail sales are decreasing; the housing market is finally coming back to Earth, and even used car sales are cooling. The rise in interest rates will affect consumers’ wallets and force them to cut back even more.
Some brands take months to develop nice-looking PowerPoint slides they call their annual marketing plan, but you can chuck that great-looking deck out the window because the market is changing rapidly. Now is NOT the time to be cutting advertising, and T.V. is still your best choice, not social media.
Watch out for bumps ahead.