As the cost of living crisis worsens, consumers are increasingly putting the brakes on spending. While essentials such as groceries remain a staple on their shopping lists, supermarket own-label brands now account for over 50% of grocery sales. With a challenging economic backdrop, where consumers are rapidly opting for value above everything else, what must brands do to remain relevant?
Ross Carlin, Managing Director of The Good Food Group and founder of The Buyer’s Discovery Club shares his advice.
With economic hardship driving price as an increasingly important factor for buyers, brands are struggling to keep up with own-label counterparts. But while many brands are set to face potential profit losses during this period, innovators among brands are looking at what they can do to drive added value to the customer to entice spend.
Spotting opportunities in crisis
Storytelling is key to relevancy in a market that is still largely dominated by brand values and ethics. Consumer morality and attitudes more commonly align with the brands they buy from, so brands need to invest in connecting with consumers on a deeper level.
You only need to look at cosmetics retailer LUSH for instance, who recently decided to give away 100,000 bath bombs to encourage people to make time for bathing and relaxation – with mental wellbeing a priority for consumers in the current market. With the public also focused on the tragedy in Ukraine, as well as an economic downturn, it is also pertinent for brands to rally together in aid of those most affected – donating profits and reducing food waste via charitable avenues.
Personalisation and sustainability remain further emotion-evoking tactics for the grocery industry. Coca-Cola was one of the first companies to spark the global trend of personalising brand packaging, with their ‘Share a Coke’ campaign selling over 150 million personalised bottles. Coca-Cola has also launched recycling initiatives such as its ‘round in circles’ campaign, reducing the number of its bottles ending up in landfill.
Now, other companies are looking to stand out with sustainable launches that seem too good to be thrown away – Pimentae Drinks, for instance, has designed an artistic bottle inspired by the founders’ Mexican origins, with painterly landscapes on the labelling and an ethos which encourages upcycling the bottle for interior decor.
Turning discounting on its head
Often, retailers will look for brands that can offer the best promotional strategy to stimulate sales, such as BOGOF, multi-buys and temporary discounts, but this can leave them sacrificing margins, especially as brands are also fighting for space on in-store and above the line visibility campaigns. These extra costs can significantly reduce net margin making them unsustainable long term, while discounts can also diminish the product’s value in the eyes of consumers.
Rather than permanently offering cost cuts to consumers, consider educating them on how your brand can reduce household costs. With six in ten UK consumers saying that ideas on how to make their favourite meals on a budget would be appealing, brands should look to assist consumers with cooking for less and household waste reduction.
Brands such as Branston Ltd are paving the way to inform consumers, with its Seasonal Spuds recipe website that diversifies the way people cook potatoes all year round and tackles food waste putting solution recipes at the fore such as potato peel soup. The brand even inspires children to join home growing activities exploring other ways households can cut costs.
Health products on the rise
Heightened by the lasting effects of the pandemic, ‘better for you’ products are taking the nation by storm, with a new generation of eco-conscious consumers prioritising their health and wellness needs.
Nutri-cosmetics, supplements, and functional food products are continuing to grow, with stores like Asda improving their own-label products in the vitamins, minerals and supplements sector. Boots is even personalising the user journey, enabling customers to take a quiz in order to recommend a bespoke vitamin plan for them.
We’re seeing consumers now proactively seeking functional and fortified food and beverage products that are comprised of multiple vitamins. Brands such as Nutrigums are disrupting the sector by creating on-the-go style supplements that don’t compromise on taste and are in an appealing gummy format for customers.
With HFSS legislation also set to impact unhealthy food categories such as biscuits and chocolates, brands must start to innovate new product development to target holistic health needs. To remain relevant, brands should consider how they can fit into a busy lifestyle routine and promote optimal health beyond basic nutrition.
Make loyalty your cornerstone
Retailers are increasingly looking to make their stores ‘destination driven’ and own-label is already playing an important role in this. Customers want ‘cross shopping’ functionality, for instance, to pick up their cosmetic and baby products alongside their weekly shop and reduce time and costs. So, we are seeing greater investment in non-food own-label in order to drive more own-label participation and to keep retail loyalty. Take Lacura and Mamia by Aldi for example.
As retailers are keen to drive value own-label and exclusive brands as part of their goal to increase loyalty in their stores, other brands must step up their game to achieve a loyal fanbase. Reward programmes, referral schemes and subscription models are all part of this thinking, so back-of-pack loyalty schemes, free items in return for reviews and reciprocal discounts for referrals must all become part of the wider thinking for brands. Even the likes of D2C recipe boxes like Gousto are ensuring gold customers are gifted with freebies and new sign-ups receive heavily discounted first-month trials.
While it is true that own-label brands are surging in desirability, brands can still compete and carve their niche, whether it’s added value content to help consumers with everyday problems, or by engaging them with purpose-led marketing – there’s still room for both in today’s climate.
