Over the last 2 years, the way people shop for groceries has been quietly but rapidly changing. Inflation fatigue, rising gas prices, reduced SNAP participation, and other factors have led shoppers towards a “new affordability era.” For grocery operators, that means understanding this shift in behavior, which has led to a 2% year-over-year decline. And, we don’t see that slowing down anytime soon, as 80% of consumers are actively trying to spend less.
The stores that will claim market share in this new era are those that consistently provide a valuable shopping experience to earn the trust and loyalty of their shoppers.
The way to earn consumer trust in your brand is not by panicking and cutting prices across the board, which can erode margin without necessarily changing how shoppers see your store. Instead, that trust comes from working price and promotion together, with each lever reinforcing the other.
Retailers can start by identifying where value perception breaks down, then put discipline in place to protect it. That is how to deliver real value to shoppers while protecting the margin the business needs to stay healthy.
Where Value Perception Breaks Down
In a high-low model, pricing and promotions do different work. Promotions communicate value to drive traffic and excitement. They get the shopper in the door and create opportunities. Base pricing sets the standard shoppers measure the store against. It must be competitive on true key value items (KVIs) every day, stable on other items, and give promotions the foundation to actually land as value.
When operators do not distinguish between the two, price becomes the default answer when the economy points shoppers toward value-seeking behavior. A softening promotional calendar gets treated the same way as a softening base price, with the same lever pulled either way, and the KVI signal gets buried. Neither function gets the attention it actually requires, and the trust a retailer has built erodes. Getting there starts with clearly defining the role and objective for each one on the shelf.
This shows up often in practice. Many operators are disciplined about pricing their most sensitive KVIs competitively, but stop short of building in the margin on inelastic, background items that a full pricing strategy requires. Over time, that gap shows up as a profitability shortfall. Without a plan to recover it gradually, the fallback becomes a round of price increases pushed through late in the fiscal year. Shoppers notice that kind of sudden shift, and it undoes the trust the KVI work was meant to build in the first place.
Building Trust in an Affordability Era
So if blanket low pricing is not the answer, how do you develop loyalty among value-seekers?
The work begins with knowing exactly what type of customer you are prioritizing and who you are competing against. That may change from one market to the next, and that answer needs to be established before anything else.
From there, you need to identify the role and objectives of your promotional and base price levers, potentially by department.
That work needs a plan behind it. Build a financial model that lays out promotional goals up front and shows how the background items are meant to support the KVIs and the ad calendar around them. Execute against that plan, but stay close enough to the shopper response to adjust as results come in.
In our experience, it is best to develop a base pricing cadence that allows for pricing different regions independently to maximize margin where prices tend to be higher. Spend time not just being aggressive on key items, but recapturing margin in the background.
Finally, be patient. Base pricing changes do not influence shopper behavior overnight the way an aggressive promotion will. Frequent changes in tactics leave shoppers uncertain and wary, rather than trusting and loyal. Stay the course, and allow enough time to pass. Then re-evaluate the business, the elasticities, and how base retails can support future ad and KVI investment.
The Real Opportunity
This affordability era does not have to be treated as a period to simply endure. Operators who are able to reinforce loyalty through disciplined KVI pricing, coordinated promotion, and patience with base pricing result in core business that outlasts the current environment. When shoppers have more to spend again, they will spend it where they already trust the value they are getting.
Getting price, promotion, assortment, and space to work together consistently, across markets, categories, and cycles, is the only way to give customers the best possible experience and keep your organization profitable. A partner with hands-on grocery experience can help keep that work on track, translating the levers into specific decisions and staying close enough to adjust as conditions change.