Distributors increased the amount of their promotions by 2.4 – MMAF

According to the Global State of the Consumer Tracker compiled by Deloitte, 82% of French people admit they are very worried about inflation. In the face of rising prices, consumers are changing their consumption habits. In this context, price sensitivity is very high and distributors are looking for ways to encourage consumption.

As concerns about the loss of purchasing power take hold in the minds of the French, retailers have some weapons to lure consumers into their outlets in order to maintain current demand. Tiendeo, the platform specializing in the digitization of prospectuses, has analyzed some of these anti-inflationary tactics.

“Shrinkflation”: shrinking products, but at the same price

With the increase in raw materials and the resulting costs, a sales technique has been making a lot of news lately: “shrinkflation”. It is a legal technique used by distributors and manufacturers to reduce the quantity of the product between 5 and 10%, while maintaining the original packaging and price.

In other words, cookie boxes with fewer cookies, smaller portions of cheese, etc. The change is so subtle that it sometimes goes unnoticed by the consumer. A technique that aims to remain competitive in times of inflation.

Quality or quantity? The other “cheafflation” dilemma

Cheafflation (or decline in food quality) is a very recent phenomenon, which is beginning to gain momentum, particularly in the United States, which consists in the replacement of certain products or foods with cheaper ones (food and non-food). An obvious example can be seen with some chocolates. If the product bears the wording “chocolate flavored”, it means that the original ingredient has probably been replaced by palm oil and artificial flavors, significantly lowering the quality of the product.

Although a certain margin is sacrificed, the main objective of this tactic is to increase the turnover of certain products. Therefore, the FMCG industry manages to increase the product offering and allows customers to consume their favorite products despite the price increase.

More aggressive promotional campaigns

At a time when price sensitivity is on the rise and the purchasing power of the French is compromised, promotional offers have become extremely effective “weapons”. During the pandemic, we saw how consumers changed their consumption habits and used the digital channel to shop.

In this new context, we are faced with a consumer who increasingly tends to give up his favorite brands and retailers in order to obtain a more competitive price at the time of purchase. According to a study conducted by Tiendeo and NielsenIQ, 60% of French people choose their shopping location based on the offers and promotions offered.

Therefore, promotions have now become a powerful catalyst for consumption due to their direct impact on the receipt. Consumers want direct savings on every purchase they make, without having to present proof of purchase (or other action) to receive these discounts.

“Promotions will also become more digital. Consumer lifestyles and habits have changed over the past two years due to blockages and health restrictions. Today’s consumers are increasingly digital. This is a great advantage and at the same time an opportunity for distributors, who can now launch more personalized promotions based on the type of consumer and their habits “, explains Henri-Noël Bouvet, VP of Growth at Tiendeo.

The effect of promotional offers in motivating consumers to visit stores is indisputable. As Henri-Noël points out, “Due to the increase in the prices of basic products and in the face of this new economic situation, brands are multiplying their offers. If we analyze the data on Tiendeo offers for the first quarter of the year compared to the same period last year, we can see that the offers of the resellers have increased by 2.4 times. For supermarkets it’s a way to impact consumers every week, encouraging them to come to their stores rather than the competition. “

There is also a tactic which consists in applying a promotion to leading products (for example sunflower oil, chocolate and candies, ..), adjusting their prices and placing them at the entrance of the premises or on the cover of their brochures. They serve to attract the consumer’s attention to entice him to come to the point of sale. Once in the store, the consumer is very likely to buy other products as well.

Private label: the consumer refuge

In times of inflation, private labels are the ones that tend to increase their demand. Faced with rising prices, consumers are becoming even more aware of their shopping spend and are opting for products that offer similar quality and features at a significantly lower price.

“In the last 20 years we have experienced more or less significant periods of crisis, in which private labels have generally prevailed, because they represent a safe haven in the eyes of the consumer. Some products offer savings of 20-40% over the price of more commercial brands. However, in recent weeks, we have seen that private labels are also raising their prices due to inflation “, adds Henri-Noël Bouvet.

Tiendeo is an online platform that allows brands to communicate their offers and promotions to millions of consumers in the digital world. More than 200 brands use Tiendeo technology to drive traffic to their stores.

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