Analysis from IRI calls on FMCG retailers and brands to look beyond inflation headlines and adopt a different mindset to tap into changing consumer behaviours.

Beyond the Headlines: A different mindset for a different inflation highlights falling consumer confidence, Covid fears and a widening gap between rich and poor.

Ananda Roy, SVP, Strategic Growth Insights, IRI, comments: “Looking at past inflationary events, we begin to understand how sustained inflation can affect consumer choices. Manufacturers and retailers have tended to respond by applying well-established revenue management principles. But with people evaluating where they shop, how much and how often they buy, and whether to uptrade, defer a purchase or leave a category, they need to better understand these changing needs.”

IRI also analysed brands that have successfully mitigated past inflations to reveal key characteristics:

1.     Target consumers with greater precision

High performing brands see inflation as an opportunity, investing in understanding changing behaviours that are likely to shift demand and deliver growth. They also re-align their marketing portfolio, pricing, distribution, revenue management, and brand mix to ensure they are in the right markets with the right product at the right price.

2.     Behave counter-intuitively

They adapt in the short term but stay consistent in the long term. This includes counter-intuitive behaviour like reducing innovations and investing marketing budget in trade promotions (while phasing innovation for recovery), and partnering with rivals to cut costs. But never compromise on the brand promise – quality, trust, ethics are not replaceable.

3.     Brands are equally vulnerable

They recognise that Premium, Mainstream and Private Label are equally vulnerable to inflation, including the threat of price wars and lack of availability in the right stores.

According to IRI, shoppers are less likely to react to marginal price increases and more likely to react to ‘sticker shock’, such as rising energy bills. This reflects the gap between headline inflation rates and forecasts and actual changes in consumer purchase and consumption behaviour.

IRI is running a webinar, ‘Beyond the Headlines. An Imperfect Inflation’ on 24 Feb