Shoppers’ wallets across all generations have taken a hit, with a majority of grocery shoppers (68%) seeing a $20-plus increase in their bill every trip.
As we enter 2023, brands and retailers must remember that shoppers have made permanent changes to their shopping habits to adapt to these increases, including looking for savings and coupons, switching brands, purchasing more store brands and switching retailers. As a result, brands and retailers need to employ savings strategies to continue winning at the shelf, or to take advantage of an opportunity to gain share from competitors that may not offer the same savings.
Here’s what we predict across the incentives industry in 2023:
Consumers are going to continue to demand savings.
Shopper demand for coupons has only increased with rising inflation in 2022 and is strong across all ages. A vast majority of shoppers have adjusted their shopping habits to save, including 66% who are looking for coupons and discounts, and 84% who have switched brands for savings. After a year of consistently rising and record-high prices, shoppers are feeling the pressure to compare prices, and the brands that offer those savings will win in 2023.
Retailers will increase the promotion of their programs to meet the needs of shoppers.
Not only are shoppers switching brands often, but they’re also even switching retailers for savings amid inflation. We found that nearly 60% of shoppers switched retailers for lower prices in 2022, an increase of 16% over the course of the year. Retailers must ensure that they’re providing shoppers with maximum savings, and that their shoppers are aware of — and can easily find — the savings they’re offering through consistent omnichannel communication. This also gives those brands additional shopper exposure.
Consumer adoption of digital incentive methods will continue to grow.
Consumer packaged goods companies (CPGs) have been shifting promotion dollars from paper to digital, because consumers have been trending toward digital for a few years now, as evidenced by digital coupons’ share of redemption growing by 20.2% in the past year. Additionally, brands that “paused” promotions in H1 2022 — due to supply chain or inflationary pressures — are poised to increase their spending on incentives to regain shoppers/volume lost to private labels/competitors.
With the increase in digital incentive use, and CPGs’ desire to build direct consumer relationships, we see increased spending on brand-managed digital rebate solutions. To date, we’ve seen brands experimenting with cash-back apps — and we expect them to continue — while simultaneously looking for solutions that enable a brand to build its own consumer audience and deliver savings directly to shoppers.
Personalization will be key to winning shoppers and optimizing budgets.
With the constant price-shopping that consumers are doing, anything that brands and retailers can do to make it easier for shoppers to find savings will make all the difference. Retailers will need to leverage personalization and incentives to provide relevant savings to consumers and to enhance their savings perception with shoppers. Brands can make the most of their budget by tailoring offer values to different shopper segments (for example, lapsed buyers versus loyal buyers) to avoid subsidization.
Fraud will continue to decline in 2023 with the digital transformation.
Traditionally a significant concern with coupons, the increase in digital incentives has led to a decline in fraud — which is virtually nonexistent in digital promotions. More and more brands are shifting to digital promotions, and new technologies from multiple entities have been implemented to further reduce paper fraud.
Shoppers will continue to hunt for savings due to financial stress, and promotions will be critical as we ride out inflation. As a result, retailers are going to place a heavier emphasis on their loyalty programs to support shoppers. To capitalize on this opportunity, brands should ensure that they partner with their retailers to maximize savings opportunities that they can pass on to shoppers. With the increase of digital incentives that provide greater shopper reach, personalized engagement and opportunities for direct customer relationships, brands can meet the needs of shoppers while optimizing their budgets for outcomes that will drive their business. Driving shopper engagement through personalized experiences that maximize shopper savings opportunities will be crucial to success for brands and retailers in 2023.