As the world emerges from the pandemic, everyone now grapples with a very different kind of threat – the crippling economic effects of inflation. While some demographics experienced financial hardships during COVID, others had more shopping time and discretionary income. Inflation, by contrast, is simply reducing purchasing power across the board.
According to a recent McKinsey study, 90% of consumers have noticed price increases. They’re holding onto their dollars tighter, and TruRating’s data scientists are already seeing a 10% spike in consumers that shop around before making a purchase. Consumers are also becoming more strategic about when and how they shop, as noted by a 10% increase in the use of shopping lists for goods like groceries.
With suppliers also facing cost increases and raising their prices, retailers are left in the middle with an open-ended and painful question of what to do next. If retailers suffer a 6% rise in costs and simply raise prices by 6%, customers will take notice. Bottom lines will likely take a worse hit from the response to this change than the financial impact of cost increases alone.