How to keep your consumers, despite rising costs

The food and beverage sector has experienced a period of high inflation as well as several other factors that have impacted retail prices.

Consumers are looking for options to reduce their total expenditure in the store.Many consumers make weekly grocery store runs and see the prices going up with every visit. At the same time, there’s a lot of media attention on higher food prices. These two factors create an environment with heightened awareness to grocery bills, which impacts how people shop. Consumers believe their grocery bill is too high and they’re looking for options to reduce their total expenditure in the store.

Consumer choices

Consumers do have choices. They can trade down in the category to less expensive brands, buy private labels – since these products are often less expensive than national brands – or they can just not buy items. Food and beverage producers and processors should be aware of the options facing consumers to ensure their products are still on the grocery list.

Provide a reason to buy

When people shop regularly, we learn quickly what they think about items and value propositions, since they vote at the cash register with every visit. And while consumers think they know more about individual item prices, what they really know is their grocery bill is higher. Perception is reality, and we need to address the issue and give them a reason to buy.

Here are six ways to entice consumers to continue buying your products:

1. Share your value

If your product offers better value than other items in the category, share the message. Use social media, testimonials and other communication to reinforce the message that your product costs less per serving or per use or the package is larger. Consumers don’t always calculate the cost per use.

2. Promote your uniqueness

Many products are premium priced compared to the large national brands or private labels. The reality is your product price will be higher, so you need to give consumers a compelling reason to buy. Reinforce this message and provide as much assurance as you can that there’s a great reason to buy your product. These components of your value proposition could be related to quality ingredients, no preservatives or any other factor that resonates with your target market. It’s the time to communicate more, not less.

3. Get listed where you want to be purchased

When consumers are concerned about prices, they can change where they shop. Recently, there’s been a shift to discount food retailers and dollar stores and away from conventional food stores. Explore your customer base to ensure your products are available where consumers want to buy. If you’re listed in stores growing in traffic and total sales, it’s likely you will enjoy some growth. You don’t have to abandon existing retailers, but if they’re declining in volume, it should be a concern.

4. Consider going to a private label

When consumers are hyper-focused on price, private label products become more popular. Suppliers are expected to remove sales and marketing costs from the retailer’s purchase price, and this usually results in retail prices lower than comparable national brands. Producing for a private label can be a viable option for some food and beverage companies. Food safety standards are high and there are other considerations, such as who owns the recipe and liability for packaging inventory. Investigate the options. It’s a unique decision for every business as to whether they should pursue private label volume.

5. Check your package sizes

Some products have been criticized for changing the package size. However, reducing the size is no different than a price increase – and there can be valid reasons. If you believe your target market is only willing and able to pay a certain amount per serving, then you might have to reduce your package size to maintain the price per use. It’s really no different than increasing the price.

6. Give consumers what they want

When consumers are looking to spend less, sometimes you must give them what they want. Temporary price reductions are a reality in the food and beverage business. We’ve trained consumers to look for deals with weekly flyers, in-store specials and other discounts. A price reduction will include extra signage, which is valuable since signage sells products. Multi-buy offers can drive incremental volume, which can help offset some of the discount you must absorb.

At the end of the day, consumers these days believe they're paying too much at the grocery store. As food and beverage processors, you need to be relentless in exploring pricing options and continue to give consumers a reason to buy your product.

Article by: Peter Chapman