As prices remain high across many categories, grocery marketing is challenged to engage consumers who have less money to spend. Consumers have been reining in their discretionary spending because food, shelter and fuel prices have remained high.
The consumer price index (CPI) — which tracks a basket of goods — rose 3.4 percent in April, with shelter and gasoline driving it higher. It’s the third month in a row that inflation has increased since coming down from 40-year highs following the COVID-19 pandemic.1
“Consumers are facing affordability challenges with increasing CPI that have essentially robbed them of 20 percent of their buying power. People are cutting back on discretionary purchases trying to save money with respect to necessities, or at least optimize their spending.”1
Mark Hamrick, Bankrate’s Washington bureau chief
Major Grocery Retailers Are Making Major Price Cuts to Get Shoppers Back in Stores
Walmart—Since last year, Walmart has expanded its price rollbacks program to include up to 50 percent more products year over year in the fourth quarter. These price cuts are across-the-board, and include groceries. Walmart also introduced Bettergoods in April, a new 300-item private-label grocery line, with 70% of items priced under $5.2
Aldi—Citing persistent inflation, the grocer is passing $100 million in savings to customers through Labor Day by slashing the prices on over 250 items. The savings include everything from picnic and barbecue supplies to travel-ready snacks and healthier foods. Last year Aldi said it saved customers $60 million in price cuts during the campaign.3
Aldi said its everyday low-price groceries attract millions of customers across the country each month, which is driving growth. The company plans to add 800 stores across the United States over the next five years.3
Amazon Fresh—The online grocery retailer will offer discounted products that rotate weekly, with customers able to save up to 30% on 4,000 grocery items across the store. The savings include meat, seafood, frozen food, dairy, and cheese, as well as beverages, snacks, and pastas in both top national brands and private-label items.
Amazon Fresh in the U.S. has also expanded Prime Savings. Prime members now have the opportunity to save 10% on hundreds of grocery items when shopping online.4
Target—In an effort to appeal to value and price-sensitive consumers, the retailer just cut the prices on 1,500 everyday items from milk to paper towels, with more to come. They plan to slash the prices on about 5,000 items, which they say will save consumers millions of dollars this summer. The price cuts are centered on nondiscretionary grocery, household, and health and beauty items.2
Target has launched several initiatives this year to capture and retain consumer spending as inflation and economic uncertainty persist. In February, it added Dealworthy, a new low-priced private-label brand that expanded its assortment of low-cost everyday items.2
The retailer also introduced Target Circle 360 in April, a loyalty program with paid membership levels similar to Walmart+ and Amazon Prime. Target also added Daily Harvest, a DTC food brand, to its website and select stores.2
Consumers Change Their Habits in Response to Price Increases
Consumers are responding to rising prices in numerous ways—doing more online research, seeking out sales, and using more coupons. The number of consumers taking these actions has increased steadily over the past three years.
In reaction to rising grocery prices, consumers have increased the frequency of store visits in the past year, while decreasing the number of items in their carts.
Rising prices have resulted in more consumers relying on loyalty programs to provide them with discounts. It is the top reason consumers enroll in loyalty programs, according to a 2024 report.6
Source: Merkle 2024 Loyalty Barometer Report, Feb 14 2024 via eMarketer 6
To keep consumers engaged in loyalty programs, brands must ensure they have the right mix of rewards and perks, as well as a platform that is easy to use. Building customer loyalty as part of your grocery marketing strategy starts with effective targeting.
Engage Your Audience with Integrated Grocery Marketing Campaigns
Drive grocery visits and build loyalty with a data-driven approach that efficiently targets your highest-value potential customers. Mspark works alongside you to engage your target customer with personalized, relevant messaging. View our video to learn more.
A custom campaign coordinating print and digital messaging across multiple channels can ensure your grocery marketing reaches your target audience on their devices and in their mailbox. On average, consistent brand delivery across channels increases revenue by 23%.7
Did you know?
When your campaign messaging is personalized to your customer or prospect, they are 68% more likely to engage with your message. 8
Learn more about the effectiveness of coordinated print and digital solutions here. Complete the form below to connect with an expert to discuss your customer acquisition goals.
Sources: 6 Retailers Cutting Prices to Lure Inflation-Weary Shoppers, aarp.org, May 20241; Target to Cut Prices on 5K Items, retaildive.com, May 2024 2; ALDI Gives Shoppers a Price Break This Summer, Progressive Grocer, May 20243; Amazon Fresh Joins List of Food Retailers Cutting Prices, progressivegrocer.com, May 20244; Prosper Insights & Analytics, Monthly Survey – August 2019 and August 20235; Merkle 2024 Loyalty Barometer Report, Feb 14 2024 via eMarketer6; 3 Reasons Why Brand Consistency Should Be Top Priority advertisingweek.com, 20227; Lob State of Direct Mail Consumer Insights 20238
