According to Deloitte’s Global State of the Consumer Tracker survey, 77% of retail consumers are concerned by the increasing prices of everyday products. This number is even higher in specific regions like Ireland, Poland, and the United States, where more than 80% of people have openly expressed their concern with booming inflation.
Companies in the retail space have traditionally leveraged indicators like customer sentiment to better understand their target audiences. The significant rise in prices has caused a major shift in not only consumer sentiment, but also in the actual purchase behavior of customers, and with it, all other major retail trends.
Now, each retailer is tasked with determining the impact of price hikes on its own target audience and how this change compares to general retail consumer trends.
But, how can retail companies incorporate valuable sources like real-time customer feedback into their operations?
This article will cover the drivers behind growing inflation rates and their impact on the retail industry. We’ll also provide tips to help companies monitor the effect of inflation on real-time feedback and improve customer sentiment during this global recession.
“The outlook has darkened significantly since April [of 2022],” said Pierre-Olivier Gourinchas, the Economic Counselor and Director of Research at the International Monetary Fund. “The world may soon be teetering on the edge of a global recession, only two years after the last one”.
While the 2020 recession is the shortest on record, there is no doubt that inflation has become a major concern for consumers across all industries, including retail.
Experts believe that the modern retail industry will follow a similar pattern as it did during the 2009 recession.
During this period, ecommerce sales thrived while in-person transactions declined sharply. This pattern continued beyond the recession as online low-cost and discount providers surfaced consistently.
Modern retailers will follow a similar trajectory because the COVID-19 pandemic and ensuring recession forced the early adoption of key structural changes. These trends are expected to continue (for example, the need for digital self-serving and customer support channels) and retailers that adapt to these new preferences will be positioned to lead the market.
Some of the changes that retailers are expected to make include:
All of the points above present challenges for retailers, but mitigating the impact of inflation may be the biggest one of them all.
How do price hikes affect sentiment in the retail space?
This question can be answered from a general industry or specific target audience perspective. While numerous reports focus on gauging the perception of general consumers, measuring the impact of rising costs among a relatively smaller group of target customers presents a unique set of challenges.
It’s important to note that organizations need to adapt their processes to their unique context. In other words, you should create a sentiment monitoring plan that takes your industry, feedback channels, products, and other variables as well as customer segments into consideration.
The first step in this process is to identify the current consumer trends in retail, specifically what the real-time feedback is indicating.
There are two important aspects here, which are seasonality and understanding what part of the price variable customers are opposing.
In order to understand how much price is driving NPS or any other metric you use, you need to compare your metrics to the same period during the prior year.
If you notice that there’s a spike in feedback about prices, you can attribute some of the current customer feedback to this seasonal fluctuation. However, noticeable discrepancies should be credited to the global economic recession, especially if there were no large volumes of negative feedback registered in prior years.
To make this happen, you should use a tool that can assess existing data sets. This will allow you to analyze raw historic data and unveil prior trends that can be used currently.
It’s also important to analyze real-time feedback beyond its intrinsic value. In other words, you need to figure out what part of the price change is generating a negative feeling among customers.
In addition to selling goods, retailers can have to offer features like shipping. Some retailer companies also offer extra services at additional costs, so customers don’t always share negative feedback about the price of the actual products. This can be related to other costs, such as the aforementioned shipping or additional services.
You should also pay close attention to the customer segment and, if applicable, the physical location where complaints are coming from.
If you notice that the feedback is coming from a specific group or area, you can address the issues by organizing:
Trustpilot, Google Reviews, and other public platforms let you perform extensive competitor research and identify general trends in the retail industry.
You should work on developing an assessment mechanism for these platforms and help you determine if competitors are experiencing similar price-related feedback. This will help you understand if the negative price reaction is an isolated incident or if it’s occurring to similar brands.
Not only this, but you should also attempt to determine what steps competitors are taking and how their audiences are reacting.
Analyzing how consumer sentiment changes over prolonged periods is crucial not only to evaluate the impact of seasonality, but also to set a benchmark and measure your improvements.
This provides a true indication of what is happening in real-time because it gives you a reference point to measure the impact of the changes you make.
Furthermore, you can use sentiment data to make strategic inventory decisions. Retailers in luxury industries, for instance, can track the growth of the industry and the creation of new segments within the market. This includes consumers who are interested in semi-luxury items at a slightly lower price, but are still willing to go over the standard average.
Finally, you should use real-time feedback to improve the customer experience. Make sure to create an organized system that improves this area continuously in order to adapt to ever-changing consumer preferences.
Reviewing the different customer levels is a great starting point. This information is often available internally in retailers, but if not, work on creating customer tiers based on their actual spending as well as their acquisitional power. Then, create product lines, promotions, and other specific elements for each individual group.
Every retailer is different, so the changes you need to implement will be unique to your business. However, make sure that any improvements occur relatively quickly. This is the best way to ensure that they are perceived as a direct reaction to your customer’s pain points. In short, your promotions and additional steps need to be timed appropriately to be effective.
Experts believe that inflation will continue to grow for the foreseeable future. So, you need to determine if the negative feedback you receive is a one-time incident or if it will become a recurring pain point for customers.
While both of these require attention, a one-time poor response from your entire audience is much easier to mitigate than recurring, price-related negative feedback.
The only way that your marketing, sales, and public relations teams will implement real-time feedback is if the data is easily accessible. Because of this, you need to centralize the data you collect and update it instantly so that your teams always have access to the most recent information.
Once you have all the data and structural changes in place, you can create your strategy to help counter growing inflation.
This shouldn’t be the end of your efforts. You also need to monitor changes in your customer feedback and repeat the process to keep up with your audience’s preferences.
Let’s take a look at three applications of real-time feedback tools, specifically Lumoa, within retail companies.
Lumoa allows for a powerful feedback drill down, even if there’s data flowing from multiple touchpoints and in various formats.
This next-generation customer insights platform can analyze hundreds of thousands of reviews, enrich the data through your own unique variables, and make this information accessible to the right stakeholders.
For example, Lumoa can interpret what part of the price variable is impacting your real-time customer feedback. This can help you understand if your audience is providing feedback about the rising price of goods, shipping, additional services, or about something else entirely, like a lack of promotions.
Not only this, but the next-generation customer insights platform lets you visualize the voice of the customer (VoC) and how it changes over time.
Because of the way the change in VoC is presented, you can actually track the collective opinion of your customers and its evolution accurately, rather than attempting to interpret a change in metric value.
Retailers that implement Lumoa can also improve the products and services they offer based on concrete data.
This can help you create a plan that includes improvements like the creation of a more agile ecommerce platform, the offering of additional goods, and changes in shipping costs or providers.
At the same time, Lumoa can be applied as a practical tool that lets you dissect competitor feedback found in Trustpilot and other public sources. The platform uses this data to unveil the biggest negative drivers for competitors and figure out what steps leading companies have taken to mitigate the issue.
Depending on the feedback found, you may even be able to determine how successful these solutions have been in order to apply relevant ones to your business.
For example, if customers criticize rising costs, it’s safe to assume that increasing prices are having a negative effect.
On the other side of the equation, you can also find out if competitors are receiving positive feedback due to discounts, reduced prices, or more affordable alternatives and adopt some of these for your retail business.
Online retailers can use Lumoa’s real-time feedback analysis to understand which areas need improvements as well as the types of adjustments that need to take place. This is an essential step if you want to identify which initiatives will be awarded part of your budget.
Lumoa has already allowed many decision-makers within retail platforms to focus on the areas that improve the customer experience by taking steps like simplifying the shopping process.
This, in turn, produces a positive, measurable shift in NPS, CSAT, and other metrics used to measure customer satisfaction.
Creating a holistic customer sentiment monitoring system requires an effective and centralized feedback collection mechanism. There are many areas of your retail company that can take advantage of customer sentiment insights, including the marketing, sales, product design, and category management departments, among others.
Lumoa allows you to monitor the impact of rising costs on your company’s customer sentiment through a four-step approach. Like Lumoa, this process can be tailored based on your retail specialty as well as your unique company requirements.
If you want to learn more about analyzing, interpreting, and centralizing real-time feedback collected from various channels, get in touch with our team today.