By Emma Thompson at Golley Slater and Holly Clarkson at Relative Insight
It’s critical for grocery retailers and consumer brands to identify what they can do to be relevant and to add value in times of a UK-wide cost of living crisis. Fortunately, today, the industry can be armed with real-time insights through AI-powered analysis of online conversations from shoppers in forums and on social media, as revealed in a report released this autumn by shopper marketing agency, Golley Slater.
Thanks to the increasing power of natural language processing, it is possible to pinpoint the ‘why’ behind the ‘what’ in order to uncover surprising trends and insights around how shopper behaviour is being modified in reaction to the reduction in household budgets. This type of research can surface actionable insights as to how consumer brands and retailers can react to needs during challenging times.
If we look at recent spending behaviour changes across households, this evolution started well before today’s energy crisis, spurred in part by the overall uncertainty of post pandemic normality. Since then we’ve experienced acute supply chain disruption, recession and food inflation at +11% YOY. It’s not just non-essential spend that is being cut either; a recent McKinsey report indicated that 70% of consumers have changed shopping behaviours. The Office for National Statistics (ONS) stated in July 2022 “45% of households asked were spending less on food and essentials”. And now, with greater uncertainty due to interest rates rising, household spend is likely to decline even further.
Through text analytics it is possible to delve into specific shopper concerns and motivators. It is also possible to compare conversations from one month to another, to see which topics are gaining traction. For instance, it’s clear that, as we move closer to winter, there is growing fear amongst shoppers as the reality of the cost-of-living crisis has started to bite.
Take the fact that, even during the summer, on Twitter, individuals were more than twice as likely to discuss the issue of households having to choose between eating or heating their homes, while ‘misery’ was three times more likely to appear in conversation.
Meanwhile, energy costs were a continued discussion point throughout July to September – with people 1.6x more likely to be discussing rising costs for energy bills and car fuel. Similarly, on Moneysaving Expert, in May through to August, people were more likely to be discussing ways to save money in all aspects.
Drilling down into the detail, they were:
· 11.5x more likely to discuss making meals go further
· 20.5x more likely to exchange deals, offers and discount codes with one another, and,
· 7x more likely to discuss cancelling subscriptions
The insights also highlight a tendency for women to be the main household food shoppers, and more likely to be sharing tips on household savings than men. Certainly it’s important to be mindful of the fact that shoppers are not a homogenous group and the crisis will affect different shoppers to varying degrees. As such, approaches to segmentation may need to be revised.
Traditional segmentations – whether by demographics or life stage, for instance – may become less relevant than a psychological segmentation that takes into consideration shoppers’ emotional reactions to the crisis. Shoppers may also move between segmentations at different points during a recession. In addition, they may consider some purchases to be more valued and therefore not reduce spend in an area that they rate highly or for a particular non-essential product – the so-called ‘Lipstick Effect’ that we’ve seen in past recessions. So we have to be mindful, when advising brands on how to react, of the subjective nature of a ‘non-essential’.
If a brand is considered non-essential, they need to see what they can change to make themselves more versatile. Perhaps dialing up product performance and superiority or giving context of how the brand enhances a use or an occasion. Premium brands can also win, even in a crisis – for example, through messaging around fashion items that will last.
Value is a complex, subjective assessment of the benefits shoppers get for the price and product experience. Benefits can include performance, taste perceptions, speed or convenience, brand associations and added value benefits. For example, a parent may pay more for a packet of branded crisps if it means their child will have a snack with little argument. Alternatively, a guest may spend more on a bottle of gin to impress friends. It is our challenge as marketers to offer the shopper solutions that are seen to add value.
What’s more, in the face of cost-cutting pressures, it will become even more important that those elements of the brand which are valued by consumers are not compromised. To this end, listening to your audience is key. Be agile with communication messaging and make sure you keep the lights on because shoppers are looking for hints and tips – and may find them from a competitor.
More on the insights, trends and opinion on how brands and retailers can support shoppers in the Cost of Living crisis can be found in the paper here.
