Article written by the team at Circana, formerly IRI.
Daniel Bone, Insights Director at IRI, says: “While sustainability is top of mind for many shoppers, the need to close the cost gap is going to present significant opportunities for brands.
“Brands that embrace value, as well as values, will be rewarded for their ingenuity.”
The way people interact with retail brands is evolving at break-neck speed. As we transition into a new age of customer experience, the focus must now be firmly on connecting and converting consumers in a wide and growing range of shopping options, especially as Australia navigates the fast-rising cost of living and inflationary impacts on the supply chain. As household budgets squeeze tighter and price becomes even more intrinsic to shopping decisions, loyalty will be tested by value, and in turn, our values will be tested too. And this means shopper behaviours will continue to change rapidly.
Value itself is in fact overwhelmingly behind why we are changing brands, followed by sustainability for younger consumers and personal choice for older people. Sustainability still matters to all generations driven by concern around the ethical status of the products we buy and the companies we buy them from. For example, 53 per cent of Australians are willing to pay more to purchase from a purpose-led business with almost one in five willing to pay over 10 per cent more. This rises to over seven in 10 Gen Zs who would pay higher prices for products from companies that align with their purpose and core beliefs.
Aussies are now changing retailers if they find better value, convenience, availability and choice. While we’ll pay more in some categories, we’re switching brands or seeking promotions for essentials. In fact, perceived value drove 56 per cent of Australians to a new store or brand, while supply chain issues have also contributed to the three in five faced with stock-out issues when doing our grocery shop. But despite being more tech savvy and purchasing from a wider variety of e-commerce platforms to combat the effects of inflation on our hip pocket, people also still value the in-store experience. For example, for every $1,000 that Australians spend in overall retail, $850 is transacted inside a bricks and mortar store.
It is the era of the consumer, but it’s not one size fits all. Each generation is shopping and valuing their brands and retailers very differently. But overall – and most importantly – a consistent experience includes ensuring that shoppers can use their loyalty privileges and enjoy seamless service and fulfilment, no matter whether they purchase through livestream shopping or walk into your bricks and mortar outlet.
To ensure you’re delivering to the value and values that Australian shoppers crave as they navigate the cost of living crisis, do your detective work and deep dive into your data, and synchronise your customer experience across all touchpoints. Your focus should be on an omnichannel strategy and the base for all planning. Gone are the days of looking at each channel independently – in 2023, it’s all about an integrated lens on how the same unique shopper uses each channel on their path to purchase. Optimising the intimacy of your customer data is key to showing where, when and how they shop in the moment so you can deliver the balancing of the price of value with the price of our values.
Learn more in the IRI 2023 FMCG Outlook Report: Winning in the new age of customer experience.
This article originally appeared in the April issue of National Liquor News.