We’ve seen lots of headlines in the past few days after Kantar published their latest update across all the trade and retail press. Food retailers have been trying to hold back the tide of price increases as they face competition from the discounters Aldi & Lidl, but inflation is here to stay at a time where disposable income is being tightening with energy increases and tax rises.
Now’s the time to pull out the recessionary playbook.
Past experience of trading through recessions shows that customers will be looking to manage their budgets and spend with a heightened sense of value and will reset the quality/ price equation.
The Food Playbook where there are frequent shopping trips in a year (250 trips p/a for food) is different to Non-Food Playbook where there are on average 50 trips per annum.
In Food retailing, consumers buy the same amount of food as usual; just seek out ways that deliver value. Consumers tend to shop at the same stores; what varies is the frequency of shopping across the year / quarter/ month or week amongst their repertoire of shops.
- Consumers will look for retailers they can trust to deliver value with a good value equation (quality/price) on categories and brands that are most important to them.
- The development of a good/ better/best own brand and branded tiering allows customers to trade down whilst shopping in one retailer.
- Wasting less food is an important way to save money, either shopping more frequently or buying products with longer shelf life or simply just throwing less away (consumers freeze more leftovers).
- Promotions on categories and lines that are important in store choice and ensuring availability of lines when customers shop will be critical (no one wants to make two trips).
- Availability of things ‘I want to buy’, will always be important, but in a recession, ‘not running out of what I want and forcing me to make another trip’ will become more important.
- Reset Value vs eating out / delivery – M&S dine in for £10 established value in their ready meals by benchmarking vs restaurants / takeaways.
- Reset Value vs other services: hair dyes will increase as consumers DIY vs visiting the hairdresser as regularly.
In past recessions, in Non Food retailing, consumers buy fewer items, as well as shopping less frequently. Consumers have a repertoire of retailers they use and one retailer drops off the repertoire. In lower frequency categories it’s critical to keep your brand in consumers’ repertoire with relevant products.
Where do you place your bets with the Recessionary Playbook?
Retail is a series of trade offs that you have to make:
- Where to place limited resource to drive customer visits?
- Invest in price or quality?
- Invest in service?
- Invest in colleagues?
- Which categories lead investment?
- How do I make a decision when every stakeholder has a different opinion?
Retailers, more than ever, need to really understand the drivers of store choice and how they have changed in the last 10 months and how they may change in the future. Understanding clearly what the drivers of store choice are, is critical for retailers to place bets for Survival.
Consumers have been wrestling with uncertainty throughout the COVID-19 pandemic but their expectations for their retail experience (both online and instore) continues to be high. Retailers have to adapt and be nimble – understanding where to place their bets – as always- and those retailers that can adapt will be well positioned when the recovery comes.
At North Bailey we understand the importance of playing to your strengths in the recessionary playbook. We bring fresh perspective and critical thinking along with a wealth of knowledge to identify and solve your business problems. We are provocative, challenge convention, ask the difficult questions and allow you to see your business from a different perspective.
To find out more how we can help you identify and prioritise your trade-offs contact www.NorthBailey.com