“The cultural concepts of thrift, frugality and waste avoidance are engrained among many Canadians. In fact, the notion of “a penny saved is a penny earned” is often viewed as exemplary and principled.
However, with food prices today reaching a 41-year high, Ipsos FIVE consumption study’s latest data reveals that saving money is often a necessity rather than a habit practiced out of fiscally minded principles. Today, nearly one in four Canadians (23%) resides in a household with an annual income below $40,000. Further, one in five individuals (20%) resides in a household with an annual income between $40,000 and $60,000. In aggregate, nearly 44% of Canadians live in modest income households.
The data reveals that these consumers, because of economic circumstances, have different habits when it comes to assessing value for money spent and saving money. In fact, these individuals are less likely to participate in couponing activities, perhaps with less time and fewer resources to aggressively hunt for deals. Ongoing tracking reveals that less than half of those living in modest income households (42%) used a coupon in the past three months, though usage rates did increase 12% when compared to the previous three-month period.
Beyond the time and effort required to use coupons successfully, we evaluated whether those in modest income households engage in other promotional activities. Here’s what we found:
- While those in modest income households are more often motivated to save money, they do not show stronger development for buying in bulk or taking advantage of specials or promotions.
- They do shop more often at discount grocery stores, mass and dollar store channels, while sourcing fewer items at Costco, foodservice and online channels; however, it should be noted that this is not new behaviour.
- They make fewer weekly major grocery trips, while instead making more quick re-stock and emergency pickup trips.
- They rely more heavily on private-label products, which generally have a lower price. Again, this is not new behaviour.
When evaluating distinguishing behaviours among this group, per capita consumption rates of fresh food items are considerably lower among modest income consumers when compared to individuals in higher income households. In fact, they consume less fresh meat and fewer fresh fruits and vegetables, in part, due to the higher cost of these products. Conversely, they do, however, consume more frozen food options and this is driven by value.
While Canadian grocery retailers continue to strategize how to provide value to all shoppers, it is important to understand how to target those in the modest income tier to grow your customer base. Consider the following strategies:
- Geo-targeting coupon activities to enable automatic downloads upon store entry to eliminate the hassle of logging in or loading coupons.
- Waving delivery fees for those customers living in modest income households based on reasonable minimum trip spends.
- Reward private-label loyalty based on cumulative purchases over a monthly period.
It’s worth noting that the share of Canadians who now reside in modest income households, and who are required to weigh food and beverage expenditures against other necessary expenses, may be larger than previously thought. And while these shoppers are price sensitive, their sheer size and loyalty to retailers who can crack the price, convenience and selection code will undoubtedly be rewarded as we continue to wade through inflationary headwinds and rising prices.”
*This article is excerpted from Canadiangrocer.com website, published on 10th November 2022