As high inflation rates and supply chain disruptions continue to trigger rapidly rising prices for many CPG brands, shopper intelligence company Catalina has released “The 2022 Ultimate Pricing & Promotion Inflation Guide for CPG Marketers” to help navigate current economic challenges.
Per the guide, brand loyalty is being challenged like never before, as more people change their shopping behavior by looking for lower-priced alternatives, including store brands, and seeking more promotions and discounts.
“This inflationary period is unprecedented. Marketers shouldn’t be looking back to their 1980s playbook for guidance. This perfect storm of raw goods price hikes and supply chain disruptions — on the heels of forced trial during the pandemic — has thrown the concept of loyalty up in the air and is redistributing it,” said Sean Murphy, chief data and analytics officer for St. Petersburg, Fla.-based Catalina.
The guide offers several ways for CPG marketers to fight the Great Loyalty Rebellion by offsetting inflationary price increases with personalized marketing campaigns that rebuild consumer trust and loyalty. Key takeaways include:
Murphy said that marketers need to closely monitor and quickly respond to changing consumer purchase patterns across grocery categories. Catalina tapped into its Shopper Intelligence Platform to track price increases across 10 common product categories. The result is its new Catalina Shopping Basket Index, which found that the aggregate price of those 10 categories in first quarter of 2022 was nearly 10% higher compared to the same quarter in 2021. This echoes the U.S. Bureau of Labor Statistics Consumer Price Index. Prices for food enjoyed at home have risen 11% over the 12 months ending April 30. The food index overall increased 9%, the largest 12-month increase since the period ending May 1981.
Price increases in the basket were led by Cereal (+13%), closely followed by Frozen Prepared Food (+12%), Soft Drinks & Water (+12%) and Soaps & Detergents (+12%). At the other end of the spectrum, the basket’s average price increase was mitigated by relatively modest increases in Hand & Bath Soaps (+6%) and Frozen Vegetables (+4%).
Many food retailers have already implemented new pricing initiatives to help alleviate the burden of rising inflation rates for their shoppers. For example, Giant Eagle is offering savings of up to 20% for myPerks members on more than 1,000 popular items, which are marked with a blue tag. Weis Markets Inc. is making a multimillion-dollar investment to lower prices on hundreds of its best-selling frozen products as an expansion of the grocer’s Low, Low Price program. And Big Lots, Inc. is kicking off summer with inflation-busting discounts. The retailer announced that it is offering items at savings of 25% to 50%.
Pittsburgh-based Giant Eagle operates more than 470 stores throughout western Pennsylvania, Ohio, northern West Virginia, Maryland and Indiana. The company is No. 36 on The PG 100, PG’s 2022 list of the top food and consumables retailers in North America. Sunbury, Pa.-based Weis Markets operates over 190 stores in Pennsylvania, Delaware, Maryland, New Jersey, New York, Virginia and West Virginia. The company is No. 61 on The PG 100. Columbus, Ohio-based Big Lots operates over 1,400 in 47 states and is No. 52 the list.