2021 TRENDS: 2/ Value

Hot on the tail of re-commerce (our collective enduring love of a bargain) is an ever-growing demand for value for money. For many, the pandemic was an important time to make money stretch a bit further. For food retailers especially, it was a real opportunity to re-evaluate their offering.

What we're seeing

OWN BRAND HAS ITS DAY

50% of consumers now consider financial security in their top three priorities – a rise of 36%. With these figures in mind, it’s no surprise that the pandemic shook spending habits and in particular, the food retail industry. For retailers it became a unique opportunity to reposition their private label offerings. During the height of the first lockdown, shoppers looking to stock up found their preferred brands were unavailable and chose own brand equivalents.

The added bonus with private labels is that they’re also more affordable and better value – 44% of consumers cited both these as reasons why they started buying own brand products.

We see this as a real opportunity for brands to develop their own brand look and feel, from navigation and shelf edge to packaging. Target’s Good & Gather is a great example of this. They’ve taken its packaging beyond an imitator of a national brand and creating something that feels premium with great shelf appeal. It’s more than just offering a like for like product, it’s about creating a whole brand and ethos around the range. Also, retailers are looking to expand and create more unique flavors etc to make their own brand items more of a reason to shop with them - adding more perceived value.

“Retailers that seize this moment to reset their private-label strategies can translate short-term switching behaviour into long-term customer loyalty”

THE VALUE SHOWDOWN

With a looming recession and countless jobs lost in the fallout, many will find themselves stretched thin. This is a key driver when navigating purchasing decisions; customers increasingly want good value for their money. At the height of lockdown in demand items were removed from promotions (for obvious reasons) but as restrictions are loosened or lifted entirely, we’ll see a return to the status quo.

After all, it pays to cut prices. In the UK alone, the big supermarket retailers are already well underway with a price war. Tesco was the first to tip its hand, telling suppliers to agree to drop prices by 10th July, 2020. Meanwhile, ASDA has resurrected their classic ‘pocket tap’ TV ads which first appeared in 1977. It’s part of a £100 million investment to lower prices across thousands of their own brand and branded products. While others are pushing down prices, Sainsbury’s is locking them down. They’ve built on their Price Lock campaign – an initiative that slashes prices on own label items by 30% for a limited time. Morrison’s have adopted a similar approach, choosing to focus on their own products, with just 20% of their cuts affecting brands.  

IT PAYS TO BE LOYAL

At the peak of lockdown any preferences customers had for certain retailers went out the window. Instead, it became a quest for stock, regardless of where you’re buying it. Now that supermarkets especially have a better idea of what’s in demand while we all stay at home, we’ve seen loyalty schemes begin to ramp up.

It’s crucial that they’re now offering customers more than guaranteed loo roll. Tesco have taken a novel approach, offering their Clubcard members “the power to lower prices.” Now customers can clearly see at shelf edge the savings they’ll make just by becoming members. M&S have relaunched their Sparks card as a digital first loyalty scheme. It includes personalised offers, charity donations and free random gifts. Could these initiatives entice customers to stick to a single brand or has lockdown shaken up the landscape where customers are no longer loyal but like to shop around? Time will tell.

OUR TICKETY TAKE

In a time where value might trump all other factors – including brand loyalty – a clear, competitive and considered value offering will be essential for retailers if they want some of their customer’s hard-earned cash.

We see this as a real opportunity for brands to develop their own brand look and feel from navigation to shelf edge. Making the customer your priority and understanding their needs and what’s relevant to them should be the focus at all times but critically at a time such as the one we find ourselves in. Get it right and they can convert their customer’s short-term switch into long-term loyalty.