Today, “budget customers” contribute to around 15 to 20% of the total turnover of a retailer.
They are becoming a major stake in the retailer’s strategy. It is even more true in the current context of steep inflation and declining purchasing power.
(Data memory 2022)
To analyze “budget customers” behavior and optimize the offer within a category to address them, Memory offers tools based on shopper’s data. 5 main analytical steps enable to feed a strategic plan and to define action plans.
As a result, the implementation of the action plans recommended by the Memory platform led to 8% of increase in the purchase frequency of low-income customers for the 3 pilots categories, with no margin erosion for the retailer.
The methodology has been divided into 5 steps :
- Diagnosis of the retailer’s "Budget clients”: what is their feeding rate and their churn rate? What is the price sensitivity of these customers in the analyzed categories? Which customer profiles are represented?
- Identification of categories that struggle to address this type of customer: what is their share of offer and share of sales? What are the gaps or holes in the product offering, and the growth potential by type of brand (private label, low cost, national brands)?
- Competitive benchmark of the offer and price positioning: what is the positioning of the first prices and private labels by category?
- Recommendation of action plans by category and by brand type: how should the offer be sized (in terms of width and depth)? Which price repositioning should be considered ? What is the most relevant promotional policy ?
- Estimation of the economic impact: what are the effects in terms of cannibalization and transfers between the different types of brands (especially private labels vs. first prices)? What are the impacts on the retailer's margin?