This winter has undoubtedly been bleak for UK households and businesses.
Soaring grocery price inflation is a primary concern for many UK consumers as inflation reaches a forty-year high of 14.7%. Kantar has forecasted that shoppers face a colossal jump of £682 in their annual grocery bill if they continue to purchase the same products.
This cost of living crisis has put consumer goods suppliers and retailers under immense trading pressures. Brands are walking the challenging line of trying to absorb these additional costs to remain competitive whilst profitable.
Consumers are already adapting their behaviour to reduce spending, with 64% of shoppers claiming they are switching to cheaper brands (source: Shopmium), whilst Profitero research shows that own-label products are stealing share from branded products. In the example of toilet paper, own-label products have seen a 38% increase in share of the top 10 spots on Sainsbury's website [1].
Many brands will be deliberating about what the right product range must be, how best to communicate with shoppers, and where they should be investing in media. There is no one-size-fits-all approach however brands must understand their shoppers and the category they operate in.
In our new report with Publicis Commerce, Navigating the cost of living crisis, we address three key ways brands can mitigate against the cut back in consumer spending.
1. Adapt product range and pricing strategies
Digital shelf analytic tools can help brands to understand their market and assist them in developing a winning proposition through 1) streamlining/innovating their assortment, 2) reviewing pack sizes, and 3) analysing pricing and promotions in order to remain competitive.
Profitero analysis reveals that larger packs of wet pet food have seen a 9 percentage point increase in share of unit sales on Amazon as UK consumers search for better value [2]. Armed with digital shelf analytics, brands can identify the optimal pack sizes that drive volume, glean ratings and review insight to inform NPD, as well as leverage pricing intelligence to monitor competitors’ promotional activity.
2. Be visible on the digital shelf
The latest research from Profitero underscores the importance of increasing visibility: products that move from Page 2 of search results to Page 1 (organically) increase sales by 37%; with those that go from Page 2 to the Top 5 spots of search resources doubling sales, on average.
To drive conversion, it’s then essential for brands to communicate their value proposition, irrespective of a product’s price point. Key to this is understanding shopper behaviour and adapting content to match their consumption moments. One way to do this is by ensuring that digital shelf content is optimised across all shopper touch points.
Providing clear, consistent, and optimised digital shelf content for shoppers builds trust, improves conversion, and reduces return rates (as shoppers know what they are buying).
3. Utilise retail media to drive outcomes
Retailers are increasingly diversifying and scaling their media offerings: IAB Europe predicts that retail media will account for over 25% of total digital media spending in Europe by 2026, representing €25 billion.
Retail media offers a significant opportunity for brands to use budget efficiently: activating a retail media approach that incorporates a range of formats with clear KPIs will enable brands to remain front of mind regardless of where a shopper is in their path to purchase.
Download the full report here, or contact Profitero to learn how our digital shelf capability can help brands drive growth.
Data sources:
1. Sainsbury's Page 1 Search results for "toilet paper", 1st Sep, 2022 - 31st Oct, 2022 VS same period in 2021
2. Source: Amazon.co.uk, includes 1P + 3P, 1st Sep, 2022 - 31st Oct, 2022 VS same period LY