If you are finding yourself increasingly drawn to the “home brand” products in the supermarket aisle you are not the only one.
Rising inflation is eroding consumer loyalty in some of Australia’s biggest brands and forcing households to shop for cheaper alternatives, according to new research.
Think tank the Institute of Public Affairs estimates that Australian households are paying $136 a month, or $1635 a year, more for food now that food inflation is running at 9%.
According to the Australian Financial Review, this is prompting many people to abandon their favourite brands and go hunting for lower cost substitutes.
“We are seeing a shift in customer shopping habits as they shop to make their meals go further, including some people purchasing more canned and frozen food, as well as items like pasta and rice,” a Coles spokeswoman told the AFR.
Her comments are underlined by the Emarsys Customer Loyalty index, which found that 20% of consumers said prices were moving so high they could no longer afford to be loyal to their favourite brands. Some 37% said their priority was cost over brand loyalty.
The Emarsys research surveys the views of around 2000 people, and also found that 89% of respondents said inflation was also undermining their loyalty to subscription services, single brand stores and department stores.
“As inflation plays a large role in how consumers interact with brands and how they show their loyalty to their favourite retailers, marketers need to be more proactive than ever,” said Emarsys vice-president Kristyn Wallace.
Brand loyalty is built on brand values and characteristics for which consumers are happy to pay a premium.
This is true in good times and even in normal times, but nothing erodes loyalty like inflation and ultimately loyalty becomes a luxury which many decide they can’t afford.
It’s not only food prices which are squeezing consumers. Annual transport costs are up about $1049, or $87 a month, alcohol and tobacco are up an average of $389 and health costs are up about $186.
“Inflation is making it harder for Australian families to make ends meet and this hit to household budgets is only going to grow as inflation rates continue to rapidly rise,” Daniel Wild, executive director of the Institute of Public Affairs, told the AFR.