Inflation in the US has been decreased for many years. Was hovering at 2%. This rate has increased rapidly in recent months, approaching around 2%. But, it is still higher than the 13%. This is based on the Bureau of Labor Statistics methodology since 1980. Inflation in some categories, such as ground beef, was even more severe.
Many consumers are having difficulty affording basic needs as the prices of goods and services rise faster than wages. To cope with this new reality, consumers have taken various steps.
Shopping Discounts Stores: According to Bloomberg, many people turn to Dollar Tree and other discount shops to deal with rising prices. Additionally, approximately 50% of consumers respond to rising prices by seeking out more promotions. This could include signing up to store loyalty programs, shopping at outlet stores, and using coupons.
Using Credit Cards: More than half a billion active credit cards in the United States. More people will be in debt if prices continue to rise at their current rate.
Buying in Bulk: Some people are looking to cut down on the high cost of food. This could mean shopping at Costco (which recently saw a rise in customers) or going to a grocery shop that offers bulk discounts.
What Brands Need to Consider Going into 2022
Some brands have responded to these changes in consumer behavior with discounts and promotions. However, they must be careful not to reduce prices too much that it negatively affects their brand’s image or long-term viability. Let’s take a look at the future of inflation for brands.
1. Price Tiers
Brands can experiment with different price levels to appeal to other consumer groups. It is possible that they will also be interested in changing the package size to offset rising prices. One example is that a brand may offer smaller packages for consumers with limited budgets and larger boxes for people willing to spend more.
2. Try a new approach
Brands need to innovate on key attributes that drive consumer spending and create buzz. One example is a brand that launches limited edition or premium products to provide more value to customers and decrease the negative impact of higher product prices. It is vital to increase quality, performance, sustainability in these times.
3. Stay Vigilant
Brands need to be alert and monitor consumer behavior changes. Brands should lookout for signs that consumers may be shifting their spending to other segments. To monitor changes at the category level, brands may want to do market research or use public channels such as social media and product review sites. If there is a shift in the indicators, brands might need to change their product mix or packaging.
4. Flexibility is important
Brands must be prepared for any scenario and take steps to manage their brand and products. Mainly, brands should be flexible enough to meet changing consumer needs. Communicating with empathy, being open about price changes and product modifications, and focusing on what your products can offer compared to other options are all part of this. This can also mean tapping into customers’ ideas and selling new clients in new ways. All this can be translated into a positive brand image, reducing negative consumer spending.