Rising goods, product, and service costs have something to do with declining customer spending, which is currently the primary issue of retailers. The same worries were expressed in a BCG poll of 561 global retail executives, directors, and managers, in which 72% of respondents thought consumers were more price sensitive.
Presently, we are now seeing numerous repercussions of inflation, such as increased utility bills and expenses, which will cause consumers to spend less or for less in certain categories, such as clothing and food. Most buyers today prioritize price over product quality.
“This limits the options retailers have to recover and combat high input costs, and it creates new difficulties that retailers must combat, such as shifting consumer behavior towards specific products and customer segments,” Boston Consulting Group said in the report.
Thus, businesses must reckon various strategies with the new normalcy of inflation to retain their customers and sustain their businesses . Some of them contemplated incorporating loyalty programs, promotions, enhancing the customer experience, and offering discounts.
Retailers should regularly review consumer purchase behavior
Retailers might develop strategies and turn that (inflation) challenge into advantage. Since we’re facing serious inflation, consumers are becoming more practical, less brand-loyal, and becoming private-brand goods consumers.
Retailers must address end-to-end cost-to-serve- via supply chain visibility and diversification
Retailers can negotiate the cost of shipments with their supply and distribution partners or consider third-party logistics and supply-chain service providers to minimize quantity and delivery overhead expenses.