Inflation cooled significantly in November, but overall inflation was still up 7.1% year over year. November’s reading was down from the 7.7% increase in October and a record high of 9.1% in June. The month-on-month increase was the slowest we have seen since December of last year. While inflation remains in focus for FMCG retailers we have 3 tips to beat inflation.
Food Price Inflation
Everyday shelf prices rose another 1pt. in November, but the average price consumers paid only rose 47 basis points as promotions increased. Promotion frequency rose more than 3% in November vs. prior year while depths of discount remained flat. The promotion frequency return continues a trend over the last quarter where promotion frequency has increased year over year every week.
Price increases are rising the fastest in Beverages led higher by Soda. Perimeter price increases have slowed with the majority of the fastest price increases occurring in center store categories.
Retailers Focused on Inflation
About two-thirds of companies in the S&P 500 that reported earnings mentioned inflation, according to a search of conference call transcripts by FactSet. Looking at key retailers in Fast Moving Consumer Goods we see that inflation remains an even hotter topic. As an example, Kroger, Walmart and Costco referenced inflation more than 30 times in their latest earnings calls.
Traditional high-low retailers are continuing to regain the price position that they lost during the early stages of the pandemic as promotions return. On the flip side EDLP and low-cost retailers are seeing their price position worsen slightly as the percent of units on promotion nears 30% again.
Robust Data and Advanced Pricing Science can help you Beat Inflation
To remain competitive and to beat inflation retailers should focus on:
- Leverage ML to link your entire product catalog to competition and track prices at least weekly using a combination of in-store and online data collection
- Identify your Price Image drivers to win on the items that matter most to your shoppers at a local market level
- Optimize prices to balance both short-term revenue/margin gains while improving your Price Image to increase loyalty and share of wallet
With the right competitive intelligence and pricing data science retailers can accelerate revenue growth, increase margins and drive incremental trips. Reach out now to Engage3 to learn more about our Price Image Management platform and how we can help you optimize your pricing strategy.