PROTECTING RETAILERS AND A LIFESTYLE

SURF SKATE SNOW SUP WAKE

“How Will Price Increases Impact Consumer Purchase Behavior?” by Greg Carlucci via Total Retail

“How Will Price Increases Impact Consumer Purchase Behavior?” by Greg Carlucci via Total Retail

Credit: Getty Images by primeimages

Over the last year, unprecedented inflation has caused dramatic shifts in consumer purchase behavior. According to Gartner research, 45 percent of consumers were extremely concerned about price increases heading into 2023.

Simultaneously, more than half of consumers have traded down in the past month in everyday lower-priced industries like consumer goods. While inflation appears to have peaked, high prices remain a concern for consumers. Therefore, it’s important for brands to understand how ongoing inflation will impact consumer behavior.

Squeezed Shoppers Trade Down on Branded Products

With persistently high prices eroding their purchasing power, consumers are trading down more. Four out of the top five industries consumers traded down the most in the past year were in consumer goods categories such as groceries and household products (Figure 1).

Figure 1. Consumers Trading Down on Consumer Goods (%). Credit: Gartner Inc.

By trading down to lower-priced store brands, consumers can retain the same quantity of product they’re buying while staying under their total shopping budget.

Conversely, consumers traded down much less in higher-priced and specialized industries such as automobiles and home electronics, citing the perceived value of branded products against lower-priced alternatives.

In addition, Gartner research shows when consumers impacted by price increases consider trading down, they’re consistently more likely to choose private-label brands as their preferred alternative to branded products. More than 50 percent of consumers have already traded down to private-label brands in the past year.

Private-label brands are executing two strategies to capture market share: one, a general category approach with products branded by category or, two, a single-brand approach where a single brand spans across multiple categories that position products to consumers in different ways.

Related story: The Price of Eggs Isn’t the Only Thing Grocers Are Managing These Days

Protecting Your Brand From ‘Trade Downs’

The consumers who stated they would continue buying a traditional brand over a private-label store brand said they would do so because the brand consistently delivers quality products and services, indicating consumers will still prioritize quality where they can. When it comes to certain brands, consumers consistently point to quality, functionality and unique features as being differentiating factors (Figure 2). These are the attributes that retail chief marketing officers should focus on in their messaging.

Figure 2. Top Five Reasons Consumers Protect Certain Brands from “Trade Downs” (%). Source: Gartner Inc.

Actions for Retail CMOs to Protect Branded Products in 2023

Retail CMOs must proactively develop promotional strategies to counter trading down, depending on their product:

  • For lower-priced, fast-moving industries like consumer goods: Increase single-size product promotions in the near term if large pack size and pantry loading promotional effectiveness doesn’t limit trading down.
  • For higher-priced, slower-moving industries like personal electronics: Evaluate consumer purchase cycle changes and offer trade-in, rebates or free add-on incentives like warranties to prevent loyal customers from trading down.

Focus on showcasing the value and benefits of your product to consumers. This can be achieved through video, iconography and imagery that will reassure consumers and improve their trust with the brand. For example, visually showcasing the differences between branded products compared to cheaper alternatives will reinforce the benefits a consumer is receiving back in exchange for spending more on the more premium brand vs. trading down to a lower priced brand.


Greg Carlucci is a senior director analyst in the Gartner Marketing Practice specializing in insights and guidance for marketing leaders in the consumer goods industry. 


Total Retail is the go-to source for retailers looking for the latest news and analysis on the retail industry. Be sure to bookmark this helpful and relevant site:  https://www.mytotalretail.com/


We, at Board Retailers Association, are here to help you to succeed by providing resources including tools, introductions to Supporting Vendor Partners (shipping, private label, social media, commercial real estate, insurance, e-commerce, and much more) and educational programs that enable you to lower day to day costs, increase margins and create more remarkable customer experiences. We provide a voice for our Retail Members and will never share your information. BRA has been “protecting retailers and a lifestyle” for 20 years.

If you are not yet a BRA Retail Member, you can easily opt in to either Regular (no cost) or Distinguished ($100/yr.) Membership via this super simple join form