Amid inflation, brands need to segment their strategies

According to BrandSpark, while many consumers are looking for affordability, there is also a sizable target for premiumization.

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Shoppers are waiting for deals and eliminating more premium, pricier items from their shop, according to the latest consumer research from BrandSpark.

The market research firm’s National Profile of the Household Shopper surveyed 9,517 shoppers this summer, and found that half of respondents are feeling that money is tight and responding accordingly: 60% of shoppers are waiting for promotions to go shopping or buy certain products, while 55% are cutting out pricier items from their shopping trips entirely.

“We have also seen an erosion in the belief that the best product innovations come from name brands,” says BrandSpark International’s president Robert Levy. “While many take a neutral position, only 40% of Canadian shoppers now believe this to be generally true – the lowest level going back to 2015.” In addition, 52% of consumers say they are buying lower-priced brands.

Activities lower on the list for shoppers looking to save money are buying value-sized products (23%), shopping at discount retailers (32%), using coupons more (32%) and reducing their waste (33%).

Store brands continue to strengthen their position vs name brands as Canadians increasingly believe that private label brands are better value. The challenge for name brands is clear: 65% agree “private label products are just as good as brand name products.”

Despite the fact that roughly a third of respondents said they were shopping at discount retailers, the survey also shows that retailers known for low prices have been beneficiaries of the current, high-inflation environment.

In food and beverage, 59% of respondents said they shop Walmart regularly, up from 52% who said the same last year. Costco is up slightly from 43% to 45%, Dollarama is up to 29% from 21% and Giant Tiger is up to 21% from 16%. Discount grocery banners like No Frills, Food Basics, Frescho and Maxi have all seen slight increases in the range of 2% to 3%, while Real Canadian Superstore, Metro, Sobeys and IGA have either been flat or dipped slightly.

In household care, Walmart’s penetration is up six percentage points, aligning with the growth seen for food and beverage. Meanwhile, retailers like Canadian Tire, Shoppers and Costco are seeing small decreases.

In personal care and beauty, Walmart and Shoppers Drug Mart are now neck-and-neck on regular shopper penetration. For personal care and beauty, Costco and Real Canadian Superstore are bigger players, though Sephora is managing to hold its ground.

Amazon continues to play a big role, up significantly as a preferred destination for household care items, while showing equally strong growth in personal care penetration too.

According to BrandSpark research, there continues to be a large opportunity for mass personal and beauty brands to take share away from prestige brands: 59% of beauty or personal care shoppers agree “products from mass market brands are just as effective as those from higher cost prestige brands” – this is an increase of 5% pts from 2021.

While many shoppers are trialing cheaper, private label alternatives and flyer usage has rebounded after a slight decline during the pandemic, Levy points out that 40% of shoppers continue to consider their household to be financially comfortable. This, he says, underscores that mainstream brands should segment their communication strategies to deliver different messages to the appropriate consumer targets.

“Many brands have been promoting premiumization trends since before the pandemic, and while it may be tempting to put the brakes on these innovation initiatives, the consumer target for premiumization remains sizable,” Levy says.

According to Levy, leading brands like Tide are doubling-down on advertising that highlights superior performance and awards to reinforce the value represented by their price premium.

Meanwhile, “masstige” brands like Olay and Neutrogena have built-on existing credibility with regular innovation, including trending ingredients like retinol.

“While we saw consumers buying more premium brands during the pandemic, there is now an opportunity for mass brands to offer more premium-style products and attract consumers open to trading-down from upscale brands,” Levy says.