Ted Levine, EVP, Consumer Products, Retail, & Services Business Unit Managing Director at Capgemini America.
In a time of consumer and market shifts, it is important that companies remain action-oriented. As consumer preferences change in 2023, brands and retailers need to understand and act on the opportunities presented by these trends. In concrete terms, it is important to manage the growing tension between the simultaneous need for affordability and sustainability.
Based on my retail experience, here are three key actions businesses can take to get ahead of these evolving trends and meet consumer demand.
1. Unlock efficiency to support pricing strategy review.
With today’s high inflation and sky-high energy bills, consumers are struggling to meet their basic needs for food and other essential items. According to a report from my company, 67% of customers say brands and retailers need to lower prices for the products they need to survive, such as food, medicine, fuel, clothing and utilities.
As retailers reassess pricing strategies to meet current consumer expectations, they must also find ways to balance efficiency in their business. What many retailers overlook is the power that prioritizing sustainability can have in increasing efficiency. Look for opportunities to minimize food waste, optimize your supply chain and adopt sustainable business processes. This approach can help ensure that your organization is running smoothly and efficiently while giving the customer a clear understanding of the type of product and cost value they are purchasing.
2. Offer strategic loyalty programs.
Shortly after the 2008 economic crisis, loyalty programs grew in popularity, increased by 19% between 2007 and 2009 and returning consumers to brands that offered the best deals. Loyalty programs also performed well during the pandemic, helping customers stay engaged all the way through.
Loyalty programs have proven to be one of the smartest ways to increase sales and maintain customer satisfaction. But if you want your loyalty program to be even more effective today, consider offering customers additional ways to reduce their spending and use products and offers that have a positive impact on the environment.
Our latest consumer trends report found that 70% of consumers say they would like brands and retailers to offer more discounts to help them buy essential items, and the same percentage expect to get bigger discounts as a loyal customer. Retailers can meet these needs with strategic loyalty programs that offer discounts to loyal members. For example, Thrive Market, an online grocery platform that offers $5 monthly memberships, recently launched a discount destination hub which allows members to access the new Thrive Rewards program, which “aggregates deals across the site in one location.” Thrive Market even promises members that they will recoup their annual dues in savings or receive a credit for the difference.
In addition to cost-effective loyalty programs, customers also appreciate companies that make an effort to introduce more environmentally friendly options. Some ways you can encourage shoppers to go green include rewarding them with points for recycling their products in-store or giving shoppers the option to donate their loyalty points to a specific environmental cause.
Corporate Social Responsibility (CSR) is a business model that helps companies to make good, socially responsible choices, not only for their organization, but also to create and strengthen the trust of their customers. As a result of adopting this model, brands and retailers are expanding themselves to support communities where their consumers live and the organizations their customers love and value. And this drive for CSR is not just driven by consumers; according to a study by Retail Touchpoints, “73% of retail organizations believe that the main reason to implement corporate social responsibility (CSR) initiatives is that it is the right thing to do.”
As organizations continue to look for additional ways to make a clear and strong impact on their environment, one of the areas they should focus on is the theme of sustainability and maximizing impact for local communities and the planet. Affordability is still a top priority for customers, but there are a number of ways you can support organizations that don’t cost much, such as donating food waste to local compost gardens or encouraging your employees to sign up for the same volunteer activity at a local food bank or homeless shelter.
With current customer expectations and socially conscious focus, there can be no choice between affordability and sustainability. Companies must do their best to put both key drivers at the center of their short-term and long-term goals if they want to meet consumer demand and stay ahead of the competition.