Why quality remains a driver of revenue growth

There’s a lot of talk about price-sensitive buyers in today’s inflationary environment, but a new study underscores the importance of quality in purchasing decisions. According to new research from RetailAI Symphony, nearly two-thirds of grocery store revenue growth comes from quality-conscious buyers.

Based on an analysis of 2.2 billion buyer transactions in the United States and Europe conducted between July 2020 and June 2021 (although before some of the recent price increases), buyers were close to 1 , 5 times more likely to move to quality-oriented segments than downward. to price-driven segments. For those who migrate more to quality items, their average unit expenditure has increased by 9%; only 28% of this increase was due to inflation.

By exploring the catalysts for these behaviors and feelings, researchers at Symphony RetailAI found that consumers are willing to purchase high-end, high-quality products based on factors such as a desire for healthier choices or just the exact mix. of products that the retailer and CPG have chosen to offer on the shelf.

The study also revealed areas of opportunity for grocers. High potential categories for quality-oriented shoppers include babies, sodas, juices and spirits, while meat and poultry, baked goods, canned goods and soup present opportunities for concerned shoppers. prices.

“Knowing precisely which customer segment drives performance is critical for today’s grocers, and this requires a customer-centric approach to the business,” said Chris Koziol, CEO of Based in Dallas RetailAI Symphony. “Retailers need to be able to segment customers to understand their pricing behavior, determining how the distribution of quality or price driven customers fluctuates over time. It is not static; it is a continuum – a more price sensitive customer may move towards quality for a particular category or product. When grocers have a better understanding of consumer motivations, they can optimize their assortments and rebalance the corresponding pricing and promotion strategies to ensure they see a meaningful return on investment for their business.

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