In times of economic strain, it’s often big-name brands that take the initial hit. Trading down household favourites for own label products seems like a quick way to save money, and that’s bad news for brands looking to retain their presence in the market.
So how do you stay in the shopping baskets of shoppers, amid a cost of living crisis?
The difficulty is, that each brand is preparing in different ways. Some are investing in rapid new product development (NPD), some are leaning into big promotional strategies, and some are pinning their hopes on shiny new marketing messages
Brands shouldn’t panic
But they shouldn’t panic. Because what UK households really want is more of what those brands do best.
That’s what we’re discovering in our shopper insight work with UK grocery shoppers. Our proprietary work reveals a bleak picture.
Consumer confidence is at an all-time low, two-thirds of the UK have less spare cash than they did just six months ago and a third are being forced to choose between spending money on food or energy.
The bottom line? Two in five of us are struggling to afford our weekly groceries.
As petrol and energy prices increase, shoppers are trying to control their weekly budget by reducing their spend on food.
And this is putting pressure on what stays in our baskets.
According to the chief executives of the big four supermarkets, shoppers are living week to week, only buying what they need right now – with the most stretched shoppers setting a tight limit at the tills.
This presents something of a conundrum for big FMCG brands: how do you stay in shoppers’ baskets when 58 per cent of them claim to be buying more own label products in order to balance their budgets?
Brands must remind customers why they love them.
Well, by reminding them why they loved you in the first place.
Consumers are typically adopting five different shopping strategies as the cost-of-living bites – each with varying implications for brands. One group, the ‘Lifestyle Lovers’, continue to put a lot of faith in brands but aren’t loyal to just one.
They represent 27 per cent of the UK market and, while they are making cuts to still eat out and go on holiday, they are still committed to buying brands.
The ‘Squeezed Savers’, on the other hand, are the hardest hit group – though they are still loyal to brands such as Walkers (snacks) and Hovis (bakery).
Importance of special offers
These brands represent a symbol to the rest of the family that everything is ‘okay’. Special offers on single items will be important to encourage these shoppers to continue purchasing family staples.
Through our research, we identified a wide range of brands which are likely to stay in shoppers’ baskets even as budgets bite: Yorkshire Tea, Bisto, Hovis, John West, Heinz and Lurpak.
But what connects those brands, and what can we learn from them?
Don’t pull back on marketing spend
It was the brands shoppers loved that stayed in our baskets: This tells us that brand building is still key at this time, and that pulling back on marketing spend is a risk.
It also demonstrates that what shoppers love about a specific brand is distinct and built over many years – it’s time to check what makes your brand unique, and to double down on it.
Brands can reduce the stress on our grocery shop: One of the biggest drivers to being purchased on a budget is being a brand “my family ask for.” Brands are fully used and rarely wasted.
There’s a reason Lurpak’s price is more elastic than other brands – not only do many consider it to taste the best, but they also know the tub will be empty by the end of the week.
Ensure consumer knows you taste best
Taste is the fundamental differentiator: It might seem obvious, but ensuring that your brand is seen as the best tasting is critical to success in the coming months.
For some brands, this is a bigger challenge than others, but we expect to see some big names hit the headlines as they alter ingredients, product sizes and pack numbers.
Shoppers who continue to invest in brands want to see those brands deliver on their end of the bargain – consistently great taste.
Stick to doing what you do best
So, if you’re a brand and you want to beat the cost-of-living crisis, stick to what you do well.
Double down on the parts of your brand positioning that work, ensure your products are a family staple and keep talking about taste.
As former Walt Disney chief executive Michael Eisner once said: “A brand is a living entity — and it is enriched or undermined cumulatively over time: the product of a thousand small gestures.”
The brands that do what they do best even under the most challenging of circumstances are the ones that will come out on the other side stronger than ever.