How Is the Cost-of-Living Crisis Affecting the Food Industry
With economic uncertainty, housing costs and inflation a continued concern, consumers are becoming increasingly cost-conscious. Streamlining budgets and reallocating spend to essentials is a notable trend. Saving is at a ten-year low, with rates of less than 5%. This financial pressure affects consumer spending behavior, with Deloitte’s financial August 2024 well-being index dropping to 99.3.
Many consumers report price as a prominent choice driver. Shoppers want deals, specials, and bundles. They reduce non-essential purchases while actively monitoring expenses. They’re buying store brands, using coupons, choosing lower-priced stores, and shopping closer to home or online. This priority is above average among lower and middle-income consumers.
At the same time, consumers still seek out quality. They’ll buy, but only if they’re confident of reliable value for money. How does the ongoing cost of living crisis affect the food industry with this growing household emphasis on tighter budgets and cost-effective, value-focused spending?
How the Food Industry Can Navigate the Cost-of-Living Crisis
Consumers are looking for stores and brands offering value and affordability. Manufacturers and retailers must focus on good quality private label products, a segment predicted to hold a quarter of the grocery market share within the next ten years. What solutions can the industry adopt?
Prioritize Private Labels and Purposeful Presence
Introducing and promoting a house brand is a clear option. Alternatives include innovation to embrace new and unique consumer needs and spaces, and increasing product and brand differentiation and buzz to stand out from private labels through value and personalization.
Revisit Retailer Relationships
It’s a good time to revisit and enhance your collaborative retailer-manufacturer relationships to ensure cooperation and visibility in store. Loyalty programs are ideal, with one in every two shoppers joining up to help meet their budgets.
Customer convenience is also essential. Retailers can also appeal to consumers and boost purchasing by encouraging various non-traditional payment options, including “buy now, pay later” methods. Close to one in four consumers (22%) are willing to spend more with increased flexibility.
Cater to Convenience and Cost-Effectiveness
You can make consumer planning and buying more efficient and cost-effective by providing nutritious budget meal plan and shopping list guidance. To make consumers’ lives even easier and save them money, introduce more plant-based proteins and frozen options to help optimize spend.
Be Where and When Your Consumers Are
Since shopping for deals is the top of mind for every consumer, make finding specials and promotions easy by advertising widely in-store, online, and through traditional media.
Continue an omnichannel presence, prioritize personalization for ecommerce customers, and maintain entertaining social media communication and campaigns, especially on TikTok.
Sustainability is also a driver, with eight in every ten claiming willingness to pay 5% more for brands demonstrating responsibility. Finally, make sure you understand your customer’s changing needs and preferences through ongoing research and analytics. Prove that you care for your user, ethics, and the environment.
Offer Product Value, Quality, and a Greener Mindset With Advanced Biotech
Passing on savings and producing high quality food products is essential. Choose from Advanced Biotech’s responsibly sourced and produced, 100% natural or synthetic, EU-certified flavor and aroma ingredients. We supply all you need, including pure and plant-based distillates, pyrazines, and thiazoles, concentrated for maximum effect and cost-effective. Order, request product samples, or contact us with any questions.