To help turn a clear challenge into an opportunity for brand owners, at IRI we are about to launch our Inflation Resilience Playbook. The review identifies a selection of high performing brands to explore their sources of category-leading resilience. We’ve identified common behaviours that have helped high performing brands navigate and even thrive during inflationary periods. These lessons don’t only apply to bigger players with deeper pockets. There are learnings for everyone. Of course, we don’t have all the answers, but we’re working to translate the inflationary impact we’re seeing into potential implications, options and recommendations that can help our clients make the best decisions.
An independent study, the IRI Inflation Resilience Playbook was developed based on a review of information and results in the public domain at a global level. It’s a vitally important piece of work to give us the insight we need to help more suppliers prepare and form a solid plan for a more positive outlook. We identified three key behaviours that the 40 high performing brands we studied had in common:
They targeted consumers with greater precision
- Consumers are actively re-evaluating – for some, inflation presents an opportunity
- Understanding changing consumer behaviour reveals new pockets of growth
- Adapting to a changing demand curve is essential
They invested and executed counter intuitively
- Don’t dismiss agile tactile options if they’re coherent with long term strategy
- Consider phasing or reducing costly innovations
- Never compromise on brand promise
They recognised that premium, mainstream and private label brands are equally vulnerable
- More premium brands will need to justify their value
- Mainstream brands need to retain current shoppers whilst also capturing new shoppers moving through the price tiers
- Private label brands need to consider the price gap between themselves and branded options
We all know times are tough, and difficult decisions will need to be made as we look ahead to the near future.
Competition continues to heat up among retailers: Sainsbury’s is committing over half a billion pounds to lower its prices and help customers manage inflation; Morrisons announced a price cut campaign on hundreds of household essentials; and Iceland brought its one penny price promotions back, encouraging online shoppers to stock up on up to three food cupboard essentials for one penny each.
Despite the rising cost of raw materials, and increases to energy and transport costs, brands must focus on standing out for the right reasons within a competitive landscape where consumers will be more sensitive than ever to cost implications. But as consumers deal with the cost-of-living crisis, new shopping behaviours will go beyond just price comparisons and downtrading, so tapping into other shopper behaviours that influence purchasing decisions beyond prices, such as product quality, added benefits and value, is also key.
Amidst all this though, we must remember that the FMCG industry is strong. Brands and retailers have become the masters of change in difficult times, adapting ranges and operations during the Covid-19 pandemic and staying abreast of varied consumer demand. What’s more, our Inflation Resilience Playbook showcases how success has been achieved in the past. Get in touch so I can send it on. Working together, taking the steps to inform the right decisions at the right time will serve us well, and there will be shoots of opportunity to grow as we forge ahead.