GLOBAL INFLATION REPORT
How retailers are responding
RETAILER RESPONSE
Impact and reactions
With clear evidence that customers are beginning to reshape their grocery habits around value in order to protect themselves against the impact of inflation, grocers have been forced to respond. Particularly if some of those new behaviours last even after inflation has normalised, as was the case during the pandemic.
As a result, grocers are increasingly using data to develop and optimise strategies around pricing, assortment, promotions and communications. The goal is to minimise the risk of losing existing customers and find ways to engage those who are less invested today, but who may rethink their loyalties as inflation takes hold.
Five steps that retailers are taking
- Using data science to refresh shopper understanding and strategy
- Focusing on the right categories and products, according to their shoppers
- Ensuring competitiveness on the right items to protect value perception
- Rebalancing how prices and promotions work together to deliver real value
- Helping shoppers find smarter and easier alternatives
BEST PRACTICE
Best practice from grocery retailers
DENMARK
Delivering value to price sensitive customers
Challenge: A Danish retailer was aiming to protect price sensitive customers from the worst impact of price increases by understanding key products and aiming for lower increases on these
Solution: dunnhumby provided a list of important products ranked by customer importance, showing those on which to avoid price increases on, as well as measuring inflation rates overall, by price sensitivity and specifically on key value lines to track the impact.
USA
Driving private brands
Challenge: A US retailer aimed to improve the value perception of their stores by leveraging the private brand as they experience stiff competition and challenges in price perception
Solution: dunnhumby helped with a private brand strategy project to assess the current situation and co-create a strategy and implementation plan including rebranding, guardrails, and governance process. As main result, price perception was improved for all three brands.
NORWAY
Innovative promotions
Challenge: A Norwegian retailer wanted to build effective promotions, create a higher level of differentiation against competitors aligned with each of the banners’ strategies, and personalise promotions to a higher degree to make it easy for customers to find and see value.
Solution: dunnhumby used advanced customer data science, deployed via tools and consulting to optimise promotions via flyer for all banners, and started personalising promotions via the retailer’s mobile app.
SOUTH AMERICA
Driving value beyond food prices
Challenge: A retailer in South America wanted to launch different promotional activities for the nappy (diaper) category to accommodate price sensitive customers
Solution: dunnhumby helped set a framework and measurement system to evaluate each promotional period, and to identify which nappy brands and sizes had a better performance, to in turn develop more relevant promotions for the category.
EUROPE
Helping customers find value
Challenge: A European retailer wanted to remind customers to use their loyalty card vouchers, as one of the ‘value hacks’ to help with the rising cost of living. Other hacks include looking out for price match guarantees and using the Scan as You Shop service to help watch in-store spend.
Solution: dunnhumby helped by reviewing the impact of these reminder actions over time and identifying the areas in which to prioritise the investments, based on customer insights.
CHILE
Supplier engagement
Challenge: A retailer in Chile wanted to improve availability on most important products for their loyal customers and price sensitive customers and allow category managers to engage with suppliers differently based on the important of those products for their key customer groups.
Solution: dunnhumby helped with Customer Priority Assortment – using customer data science to understand which products are important for their loyal customers and most price sensitive customers.