A new report from dunnhumby shows retailers have plenty of other tools for attracting cash-strapped consumers.
As consumers facing record inflation continue to tighten their belts, it may seem like the only retailers actually “winning” in today’s marketplace are Aldi and Dollar General. But a special inflation edition of dunnhumby’s Retailer Preference Index reveals that while those chains are, indeed, leading the pack, a handful of retailers not known for low prices are grabbing more than their fair share of price-conscious shoppers as well.
MARKET BASKET TAKES TOP SPOT
Based on the responses of more than 18,000 consumers, which were then modeled against foot and web traffic data, dunnhumby’s analysis indicates that 50% of the perception that a particular retailer “saves me money” is driven by low base prices. So it comes as no surprise that the top five include Market Basket (F&R Buyer’s 2022 Retailer of the Year), Aldi, Winco, Grocery Outlet and Save A Lot — all of which hang their hat on very low everyday prices.
But that doesn’t mean mainstream retailers can’t prosper during inflationary times, too. Some of them are. It’s all about how they use the other levers at their disposal (mass promotions, personalized promotions and loyalty, and private brand and bulk packs), which, when combined, drive the remaining 50% of consumer perceptions around which retailers save them the most money.
Retailers best able to choreograph those levers may not have cracked the first quartile of chains best positioned to save consumers money, but they have enjoyed better-than-average results, reports dunnhumby, citing Kroger, Food Lion, BJ’s Wholesale, Weis Markets and ShopRite as examples. “They edge base price leaders on saving customers money with private brand and mass promotions. They clearly differentiate themselves on making promotions more personalized and relevant, with a loyalty program that saves customers money. And most importantly, they outperform base price market leaders on driving awareness of messaging that supports these price savings efforts,” says dunn-
humby.
By coordinating their efforts around these levers, retailers can reduce the gap in price perception versus Walmart up to six percentage points, according to the report. “That means that a $5 billion retailer who follows best practices today realizes approximately $160 million more in revenue per year compared to retailers not following best practices.”
The bottom line is that low base prices are far from your only option. So if you’re a retailer with a quality-first position, you don’t have to just wait it out and hope foot traffic returns when inflation finally retreats.
To download a copy of the report, visit dunnhumby.com.
KEEP THE NOMINATIONS COMING!
Since we announced our FoRWARD Awards last month, we’ve received a steady stream of nominations from folks who want to recognize Frozen & Refrigerated Women Achieving Remarkable Distinction. And take it from me, these ladies are impressive! We’ll honor the inaugural class in our January-February issue, so there’s still plenty of time to nominate a colleague who’s worked hard to earn respect and a leadership position in our industry.
Just drop me an e-mail and explain in up to 200 words how your nominee has made a valuable contribution to her company, and why she is deserving of the honor.
