Defining value in a cost-of-living crisis…

According to research from Kantar, 4-week inflation in the grocery sector is at an alarming 3.8% reflecting the fact that it’s not only energy bills that are on the rise but everyday goods too.

Basket sizes are about 10% smaller say Kantar, likely to reflect the return to work and socialising so the out of home food and drink spend will be on the rise as confidence returns…razor blade sales are up and sales of deodorant have increased by a massive 20% (we don’t mind if we stink at home apparently!).

Digital grocery sales are down 15% year on year, perhaps not at all surprising given the lockdown we were in but digital still only accounts for 12.5% of all grocery spend as we return to supermarkets for our weekly shops.

The 3.8% rise in costs means a £180 increase in the average household’s annual grocery spend. As costs rise, “value” is likely to be uppermost in consumers minds and brands face challenges winning and retaining their custom.

But what is “value” anyway? At it’s base it is the worth of a product or service. But “worth” means something different to each and every shopper.

I may believe that a cheese sandwich is a cheese sandwich and opt for the cheapest on the shelf at 99p. you might baulk at the high salt content, tasteless hard cheddar and lack of tasty chutney and head for the premium packaged £3.99 snack which in your mind is better “value” given the product (and what you have in your pocket). So value is in the eye of the beholder.

Over time, your perception of the value of that sandwich will be that it’s worth £3.99 (as you form the habit of paying that amount for it).

With the cost of living rise it’s almost certain that supermarkets will pressure suppliers into discounting their products at point of sale to ensure share of shelf space but this brings great dangers to a brands “value”.

Used tactically, price promotions can be effective in the short term but maintained over time have a detrimental impact on a brands value in the shopper’s mind. If constantly discounted then a products value (its “worth”) to the shopper naturally reduces to the price they regularly pay for it.

At SPARK we help brands and retailers to increase the value of their goods without reducing their “worth” (in the way that price promotions can). We do that by understanding shoppers and their buying motivations (both conscious and unconscious) and by creating “added-value” tactical promotions using partnerships, gifts, premiums and prizes that trigger both the first purchase and the ongoing retention (loyalty) of that shopper to our client’s products.

In a time when prices are on the increase and purchase behaviour is increasingly considered, it’s never been more important to maintain your product’s value to your audience.

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