Is the price right? Pricing strategy in an era of record inflation has become one of the most pressing concerns of grocery stores nationwide this year. With U.S. inflation hovering at a 40-year high, prices of all fast-moving consumer goods are up nearly 7% from last year, with meat and seafood up 14.2% and 12.4% respectively, according to NielsenIQ’s latest March 2022 report. Consumers are, not surprisingly, unhappy with the higher prices. Surveys suggest that they are not only significantly overestimating the amount prices have risen, but are now less satisfied with the grocery shopping experience overall. All in all, it makes for a challenging time for independent grocers.
How should grocery stores respond to the situation? In a new report, NielsenIQ has some suggestions:
Address the issue. Consumers are understandably very sensitive to price increases right now and communicating with shoppers about inflation is critical. Don’t simply ignore the elephant in the room. Instead, explain why prices are increasing, and the steps your store has or is taking to mitigate price increases.
Demonstrate value. Some shoppers are trading down. But even those shoppers are looking for value. It’s your store’s job to maintain a positive a price image. Our Strategic Tool to Enhance Pricing (STEP) program provides an efficient way to help your store analyze its pricing strategies and identify ways to attain maximum ROI.
Offer coupons and loyalty rewards. It’s never been more important to provide ways for shoppers in all income ranges to save money. But the offers must have value to each shopper. You want to make sure your shoppers know you appreciate them with customized money-saving offers that appeal to them.
Know your competition. This is a critical time to assess how well other stores are demonstrating value to their shoppers and to make sure you’re remaining both relevant and competitive. This is a bad time to have a subpar pricing strategy and that’s why we’re big believers that the right information can help your grocery business become more competitive, efficient, and profitable. Our Competitive Price Check service provides grocers a way to keep an eye on local competitors by providing full-service price check coordination and reporting to help manage price perception.
Stay on top of trends. During the first wave of the pandemic, shoppers made fewer trips to the store and ordered more groceries online. That’s happening again according to Nielsen, but this time it’s due to higher gas prices. Some shoppers are doing a bit of stockpiling of their favorite products out of concern that they may be more expensive the next time they shop.
So what do you do? There’s no doubt that it’s an uncertain environment for independent grocers. The good news is that right tools, strategies and expertise can help your store meet those challenges and reach greater levels of success.
The actions you should take depend on your individual store, customers and market. For example, IRI’s scan data shows that several grocers have found that keeping down prices on basics like milk, eggs and meat while increasing prices across center store categories is an effective pricing strategy in this current market environment. In other areas, stores are stepping up promotion of store brands and personalized offers.
Our Retail Pricing team has that expertise and understanding of effective pricing strategies and an array of tools that can’t be found anywhere else. That’s why 95% of our retailers use one or more of our pricing tools! We have 50+ retail pricing experts nationwide with a combined 450+ years of pricing experience to support our customers. Learn more about all of the ways we can help you with the most effective pricing strategy for your market and store.
