Consumers will stop buying a product when its original price has risen by an average of 40 %, according to a new survey commissioned by specialist PR agency Ingredient Communications and conducted by SurveyGoo.
Just over 1,000 US and UK consumers answered a series of questions designed to reveal just how price-sensitive they really are.1 As many as 94 % of participants said they had noticed their food shopping bills going up in the previous three months, with 79 % stating they believed supply chain problems such as driver shortages were to blame.
Respondents were then asked to select the point at which they would stop buying a selection of food, beverage and nutrition products due to price rises, using a scale of + 5 % to ‘I would buy this product whatever the price’.
Overall, the results indicated that shoppers were more immune to price increases for low-cost staple goods. For example, the category in which consumers were least price sensitive was milk (dairy), which could increase in price by an average of 65 % before respondents would stop buying it. This was followed by bread (62 %) and fresh vegetables (60 %).
Conversely, there was greater resistance to cost increases in nutrition categories, where the base price of products tends to be higher. For instance, respondents said they would stop buying protein powder once the price had risen by an average of 17 %. The corresponding pinch point was 23 % for probiotics, 26 % for dietary supplements, and 28 % for Omega 3 fish oil supplements.
High quality ingredients are key
The survey findings also indicate that consumers are happy to shop around in order to offset the impact of upward price pressures. Nearly half of respondents (48 %) said they had switched to a cheaper brand in the previous three months as a result of price rises, while 26 % said they had changed to a retailer’s own-label version of the same product.
Richard Clarke, Managing Director of Ingredient Communications, said: “For basic goods, even a large percentage price increase might still only be a matter of cents or pennies. By contrast, a small percentage increase in the cost of a premium nutrition product might be measured in dollars or pounds.”
He added: “In such challenging market conditions, brands will need to work hard to retain consumer loyalty. An effective way to achieve this is to demonstrate added value by using high quality ingredients that provide clear differentiation and command high levels of trust, whether that’s through proven efficacy, sustainability, strong co-branding, or a combination of these. These values, communicated effectively, will tie a consumer to a brand more closely, mitigating the impact of price increases on purchasing behaviour.”
1SurveyGoo surveyed 1,063 consumers online in December 2021 (532 UK, 531 US)
The COVID-19 pandemic accelerated Canadian usage of e-commerce with online grocery being one of the main benefactors. The latest research from Mintel reveals that by mid-April, almost four in 10 (37 %*) Canadians were shopping more online, with 22 %* of Canadians specifically noting they were buying more groceries online due to COVID-19, including 10 %* of seniors (those aged 65+).
Physical grocery stores have a big challenge to encourage consumers to come back into stores and spend time inside. Mintel’s research shows that as of mid-April, 70 %* of Canadian shoppers were making less frequent trips to the grocery store than usual and in the middle of July, 71 %** were limiting the time they spent in the store. Consumers were also doing what they could to protect themselves: 67 %* said they were taking extra precautions when shopping in stores, e.g. wiping down their carts, keeping their distance from other shoppers. These protective behaviours are continuing, at the end of July, half (50 %***) of Canadians continue to be worried about the risk of being exposed to the virus, driving two-thirds (64 %***) of consumers to limit the time they spend in-stores.
Carol Wong-Li, Associate Director, Lifestyles and Leisure said:
“The challenge grocery retailers face now and in the months to come will be to convince consumers to come back into stores and shop for longer periods of time. Encouraging consumers to do so will have a positive impact on the ‘act of discovery’. Consumers will need to be encouraged to slow down and re-engage in spontaneous behaviours like browsing and trying new products, reminding them that shopping pre-COVID was a leisurely enjoyable activity, not what it is considered now – more ‘mission-minded’ with safety remaining at top of mind for consumers.
“The current uncertainty surrounding the virus remains unhelpful to the grocery shopping experience as much of it tends to be tactile, using touch and smell to assess the freshness of produce or sampling. Grocery retailers will need to replace the tactile experiences with more visual incentives to gain people’s interests, which will open up opportunities to enhance the in-store shopping experience in a safe way. Examples include providing QR codes that can be scanned by mobile phones to access full recipes or how-to cooking videos. Ultimately, leveraging platforms popular with Canadians like scannable signs that bring up recipes and/or cooking videos on Instagram, Pinterest and YouTube will work well to enhance the shopping experience while in-store.”
A renewed appreciation of shelf-stable products
The essential nature of food at home has not been lost, as of the beginning of May, almost half (48 %****) of consumers said they had made groceries a higher spending priority at the height of the pandemic, while over a quarter (28 %*) agreed that they were less-budget conscious than usual when it came to buying groceries. Shelf-stable products became a star performer, with 43 %* of Canadians saying they were buying more groceries that would stay fresh for longer like frozen, canned and boxed food.
“An area that was once stigmatized for being less healthy, the centre of the store where shelf-stable items tend to be, has been revitalized due to the uncertainty associated with the pandemic. Preventative measures put in place, like mandatory restaurant closings, led Canadians to cook more from home – providing a boost to shelf-stable products,” continues Wong-Li.
Stressed out Canadians indulge in comfort food
The link between food and comfort is undeniable amongst Canadians: nearly half (46 %*****) of Canadians eat comforting foods as a way of managing stress. During the pandemic, the importance of food in addressing elevated levels of stress was seen with a third (33 %*) of Canadian women reporting that they were eating more indulgent food like chocolate, ice cream or pizza to help them cope with the situation.
“As the uncertainty of the pandemic is set to be the reality for the near future, functional claims – including specific ingredients that help with stress relief or improving sleep – will matter more to consumers now and in the months to come,” concludes Wong-Li.
*500 internet users aged 18+, April 13-17, 2020, Global COVID-19 Tracker – Canada
**500 internet users aged 18+, July 13-17, 2020, Global COVID-19 Tracker – Canada
***2,000 internet users aged 18+, July 23-31, 2020, Global COVID-19 Tracker – Canada
****500 internet users aged 18+, May 11-15, 2020, Global COVID-19 Tracker – Canada
*****According to Marketing to Gen Z – Canada, June 2020
