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Viewpoint: Why getting the price right for upper income shoppers has never been more important

Bill Bishop, Chief Architect, Brick Meets Click shares practical tips for retailers

Do you know which grocery shoppers are making the biggest changes in their shopping behavior to offset rising grocery prices? If you guessed lower income shoppers, you’d be wrong. The surprising answer is shoppers with above-average incomes — which is a key takeaway from a new study by Halifax, Nova Scotia-based Dalhousie University researchers.

The study of 1,000 Canadian shoppers found that most shoppers are very aware that rising food prices are causing them to spend a larger proportion of their income on groceries, but that’s not the only reason they’re changing their shopping behavior. It turns out that these shoppers now have “less financial slack” in their overall spending than they did a decade ago — and food spending is one place where they can find savings.

Fifty percent of all shoppers in the Dalhousie study are doing at least something to save on groceries, like making shopping lists, following ads, stocking up on specials and trying to hold down spending, but the percentage is highest for higher income households — those that typically spend $12,000 on groceries per year, twice what the average household spends.

These findings are a heads up for all supermarkets, even those in the U.S., because it says that retailers need to find ways to help upper income customers control their grocery spending. Helping them is different than helping less well off shoppers though, because high-income customers buy more premium and specialty products. This is particularly important now, because dollar stores are already working to attract high-income customers, and soon hard discounter Lidl will enter the U.S. Lidl will be a serious threat, since it’s already proven it can appeal to high-income shoppers.

Here are some ways grocers can help their higher income customers control spending and keep them from shifting to the competition:

  • Increase price promotion on premium and specialty products that appeal to high-income shoppers;
  • Expand and promote premium private label items; and
  • Let these shoppers know that, by shopping your ads, they can hold down their grocery spending without sacrificing the quality of their food or their shopping experience.

Rising food prices make navigating the challenges in 2017 a bit trickier for both shoppers and retailers, and this study reminds us that it’s more important than ever to understand how shoppers in a particular region, market or economic segment are managing income and pricing fluctuations, and leveraging shopping tools, both digital and old school.

TAGS: Marketing
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