Customers cutting costs but still value quality – survey

June 5, 2024

A new survey from KPMG highlights the challenge retailers and brands face in balancing price competitiveness and quality.

Its latest Next Gen Retail Survey found that the majority – 76% – of consumers continue to be influenced by discounts when shopping.

Price is the main driver for 56% of customers when it comes to choosing where they shop, with 64% of people cutting back on luxuries and non-essential products due to higher prices.

Despite that 58% of customers say they are more inclined to shop at retailers that focus on quality rather than cost-cutting, with the majority saying they would pay more for quality-focused brands.

“The Irish consumer is still finding it really tough out there… price is really important,” said Keith Watt, head of retail at KPMG Ireland. “But the Irish consumer is really demanding – they want a quality customer experience, they want quality, they want customer satisfaction, but that all needs to be balanced with price.

“For the Irish retailer, it’s a really tough balance to get right.”

More than 60% also say they avoid brands that engage in shrinkflation – where the price remains the same but product sizes fall.

“Again it’s a balance, it really comes back to trust,” said Mr Watt. “Retailers and brands need to be really careful that they don’t damage the trust and damage their relationship with the consumer by decreasing the size of goods without communicating and explaining it to the end-consumer.”

The survey also found that 67% of consumers now expect brands to make sustainable products more accessible and affordable, including offering incentives and discounts for environmentally-friendly items.

When asked about the potential role of artificial intelligence in in-store shopping, just 18% felt it would improve their experience.

Just over a quarter of consumers felt the technology would improve online shopping, while 44% felt they would have to trust how retailers are using AI into the future.

“There’s a clear information gap here… retailers need to do more to explain to consumers how generative AI might be used in their business and how it might benefit the customer,” said Mr Watt. “Maybe that’s in ensuring you have the right product on the shelves at the right time, maybe it’s product design, or maybe it’s enhancing the customer experience through things like virtual shopping assistants.”

Earlier this month British supermarket group Sainsburys announced a deal with Microsoft that would see it combine the tech giant’s AI capabilities with its data.

Tesco has also announced a number of AI-related initiatives, including one that helped it to cut energy costs and another aimed at its Clubcard marketing.

Article Source – Customers cutting costs but still value quality – survey – RTE

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