How Price Perception impacts Grocery Retail

How Price Perception impacts Grocery Retail

7 April 2017

In a world where grocery retailers are battling with increasingly reduced margins, understanding what influences customer perception of your pricing can give you a real competitive advantage.

To preserve or increase market share, many opt to follow their competition with ‘price matching’, which is not a route to drive growth. It leads to price wars and increased promotional pressure which can result in destruction of value within the market and an erosion of already slim margins.

Integrating the customer into pricing decisions is an essential element, as without knowing customer expectations, it’s impossible to define a suitable commercial offer, capable of guaranteeing the right balance between price paid and perceived value. This balance is measured by the price perception of your customers.

Our study surveys customers of grocery retailers in France to measure the main drivers of price perception and to understand the levers. The importance of having positive price perception is paramount, as this is strongly correlated to customer satisfaction and long-term loyalty.

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Even making small improvements in your price perception creates financial advantage with +7%* additional visits for a customer who perceives the retailer has fair prices and +1.2%* additional spend (aggregated) with 10pts increase in positive price perception for hyper or super formats.

Download our latest report to find out more about the 7 levers that retailers are using to influence price perception and our 7 golden rules for improvement.

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