A researcher from the University of Alberta warns food consumers will cut back on groceries with rising gas prices, making it difficult for grocery retailers to survive financially.
He notes retailers may want to change tactics to provide incentives for consumers seeking bargains. The Alberta School of Business expert says grocery purchases will be the first to go when it comes to choosing gas or groceries.
Grocery promotion and pricing important for retail survival with rising cost of gas
Alberta School of Business professor Yu Ma says "If grocery retailers can offer a promotion or a pricing strategy that fits the customer's objectives, if they tailor their promotional message to consumers based on how they can save money, it would be much more effective than some blind (single item) promotion.”
Ma says when it comes to buying groceries in the face of higher gas prices, shoppers are faced with two choices. The first is retailer location that is also linked to how often to shop and the second is to either search diligently for favorite brands or choose another option. Either way, he notes the grocery bill is the first to be cut when gas prices go up.
Perceptive retailers will give consumers what they want says Ma, who notes the appeal of grocery warehouses, supercenters and one-stop shopping to keep up with buyer trends. He also says retailers with on-site gas stations would inspire consumers to drive a little further for discounts from in-store purchases.
"If grocery retailers can offer a promotion or a pricing strategy that fits the customer's objectives, if they tailor their promotional message to consumers based on how they can save money, it would be much more effective than some blind (single item) promotion," he said.
The study highlights consumer trends that will affect grocery purchases from lack of discretionary income, shifting consumer loyalties in response to higher gas prices. The University of Alberta expert researcher says gas purchases will become more important to consumers than shopping for their favorite food brand or traveling further unless there is a bargain to be had. The report is published in the Journal of Marketing.