With the current cost of living and predicted tough financial times in 2023, consumers will be thinking more about how they’re spending their money. We take a look at the areas of retail value that will impact customer loyalty and spend.

HELPING CUSTOMERS TO SPEND LESS

Prices are rising so it’s vital that retailers retain customer loyalty over shop-hopping. Why should customers shop with you? What deals are you offering? How do your prices compare?

Retailers should be adding value where they can, offering helpful ways for their customers to save and extending (or introducing) price lock promises, such as M&S Food’s Remarksable Value, or price matching. Showing customers that you understand their needs and are trying to help goes a long way to building trust and retaining their loyalty, over swapping to cheaper stores.

Tesco are one retailer who’ve effectively made their pricing strategy work harder, showing customers they want to help them spend less with prominent in-store promises, from locked low prices and Clubcard prices to Aldi price matching. Every aisle and shelf-edge promotes these propositions to reiterate to customers the value they’re adding. They also have a dedicated page on their website that details ways to save money both in store and online. Offering tips on budgeting, making leftovers go further, and ways to save with their other services, such as Tesco Bank. This understanding of customers’ needs will keep them coming back.

LOYALTY INCENTIVES

Loyalty is down. In recent months, 37% of consumers shopped a different retailer and 46% of consumers shopped a different brand. And according to research from Ubamarket, 52% of Brits no longer see the benefits of discount supermarkets and are instead choosing to spread their weekly shopping across multiple stores as inflation rises.

This lack of loyalty can have a huge impact on retailers. Offering coupons and exclusive discounts for customers who regularly spend with you can help to keep their custom. And the simpler and easier to understand the offer, the better – such as Ikea’s 5% off every visit, every day for their Ikea Family members. You may not win in a price war, but you can win with a decent loyalty programme that keeps customers coming back time and again to accumulate savings.

“96% of consumers said they wanted loyalty schemes to do more.”
- KPMG, 2019

CLARITY AT EVERY LEVEL

With 76% of purchase decisions and 80% of brand-switch decisions made at the shelf edge, clarity of pricing has never been so important.

Customers are taking 30% more time to make purchases, so it needs to be clear what the best deal is. The more straightforward the offer, the more likely a customer is to choose the product, rather than standing at shelf edge trying to work out the percentages or price per unit difference between brands. A clear hierarchy is key. Promotions that work in conjunction with your rewards programme can also help to keep customers loyal, such as exclusive discounts and meal deals.

WHAT SHOULD RETAILERS BE DOING?

With so much focus and importance being placed on value in 2023, how can retailers stand out from the crowd? One brand who have a unique value angle are Goodr, an active sunglasses brand. Every pair of sunglasses they sell are $25. This affordability and clarity of pricing is effective in its appeal to customers, who know exactly what they’re getting before they even enter the store.

Another retailer who are leading in value are Asda. Their Just Essentials offering is a single range of value products, with easily identifiable yellow branding. According to Fraser McKevitt, Kantar head of retail & consumer insight, “nearly two-thirds of Asda’s 15.2 million shoppers picked up at least one item from the range”.

Combining the areas of sustainability and value, Sainsbury’s recently created a pop up, Sainsfreeze, to raise awareness of food wastage and highlight the benefits and savings of freezing food. It was a brilliant initiative with some great advice to help their customers to save money.

“Winning retailers are clear about where they want to stand out – be it quality, price, service, or convenience.”
- Bain & Company, Nov 2022

5 WAYS TO GET VALUE RIGHT

Most customers have limited time and are on a tight budget. How can we make their lives easier and help them choose the best promotions, while working to support your business objectives?

#1 KEEP IT SIMPLE, FOR EVERYONE

It helps customers to understand and compare prices quickly. For colleagues, it will make them confident in implementing and talking to customers.

#2 KEEP IT CLEAR

Have a strong message hierarchy. The price or promotion should shout, the product information should speak, and the legal information should whisper.

#3 DEFINE AND CREATE PROMOTION TYPES

Show your customers what to look for, easily. What is a standard price, what is on offer, and what are the best offers.

#4 MAKE IT OWNABLE

Have a recognisable device that customers know to look out for on promotions and that is ownable to your brand.

#5 MAKE IT EASY

Simply scanning a rewards card at checkout to get discounts, like Tesco Clubcard prices, is super convenient for customers.

OUR VIEW

How your business treats value will be vital in 2023. Production and manufacturer costs are rising and it may not be possible to keep prices low, so promotions and loyalty schemes become more important. Customers need to feel like they’re getting the best deals and that their custom is valued. Be helpful, dependable and transparent, across all points of the customer journey.