How does E-Retail Media help gain purchasing power?
At Lucky cart, we do not claim to have a political or economic opinion on the matter, but we will try to enlighten you through the prism of our expertise on this complex subject that we want to dissect, analyze, understand to finally answer this famous question: does e-retail media help shoppers’ purchasing power, myth or reality?
Our little appetizer:
A major social fact: purchasing power is the first concern of the French. And for good reason…
This is a difficult subject because between the feelings of households and the figures communicated by economists, it’s a bit of a headache!
To start our analysis, here is the definition provided by economists “Purchasing power is an economic concept aimed at measuring the quantity of goods and services provided by a current monetary unit at a specific moment”.
Ok, once the definition is given what does it tell us? That the language of Molière misleads us a little when we focus on purchasing power and above all that there is a dichotomy between feelings and statistics. Household’s feelings on the increase or decrease in purchasing power often differs from the statistics published by INSEE. Reality is obscure to grasp. The calculation of the evolution of purchasing power is a macroeconomic indicator that concerns all households and is therefore not adapted to individual situations. Everyone perceives the rise and fall on their own scale, and the impact may be greater for less well-off households.
This is why the notion of purchasing power is to be handled with great care, there are many biases and the notion is largely subjective. Nevertheless, it is one of our major concerns.
Let’s continue our reasoning to go a step further:
The return of inflation is clearly a major fact for shoppers in 2022. Global pandemic, war in Ukraine… All these factors have a negative impact on the prices of basic necessities, and more broadly on consumer goods, energy and services.
In times of economic tension, consumption is one of the most telling indicators and consumers compensate for budget losses quite drastically. The French therefore begin to consume differently, they give up certain purchases, they try to find alternatives, they become more attentive to prices… Rather than comparing the amount of the future purchase in absolute value, they thus develop a very great sensitivity to promotions, price cuts, bulk purchases, etc.
30% of French people say they are looking for more promotions*
75% of French people think that promotions make it possible to make purchases for pleasure*
The shopping cart is lighter, the hesitations are longer when it comes to validating a product in the basket, the eye is more attentive to promotions or bargains. The quest is on and the French consumer observes, searches, compares… Another key factor in consumer thinking is price image. Shoppers can change brands by favoring those with a better price image. In this quest for the best price, the best deal, the French shopper ignores his loyalty, his habits. Price is the only argument that prevails.
« Those who are not well positioned in this area (price) will try to build up a price image, but as with all positive attributes, only time will allow it to be built » « … who expects the best in the field to make « very strong progress »
– Olivier Dauvers **
New uses and market implications on new household consumption habits
The advent of e-commerce, partly accelerated by the global pandemic, has prompted manufacturers to invest more massively in digital and more specifically in E-Retail Media. Even if we are still (very) far from international standards, the new uses of shoppers push retailers to adapt and to offer alternatives more in line with expectations, to meet the challenges of purchasing power, to make the shopper experience ever more pleasant… In short, the paradigm shift that we have been experiencing for several years now is only changing purchasing behavior!
E-Retail Media is a new playground where the field of possibilities is undeniably immense, for brands, retailers but also for shoppers.
The change of model and the adaptation to the new uses of the shoppers are therefore mandatory for the players in the retail sector. And everyone will have to show creativity, subtlety and commitment to reach tomorrow’s shoppers.
Purchasing power at half mast, a new purchasing channel: the drive allows sensible purchasing for three-quarters of French
Faced with this tightening of the budget of French consumers, the levers of loyalty are activated.
It should be noted that with a single voice, mass distribution has positioned itself as a defender of purchasing power, because it likes to remind people that its primary mission is to meet the ‘primary’ needs of the greatest number and to be an ally of daily life. A whole series of promotional campaigns designed to increase purchasing power have been orchestrated around essential everyday products, shopping list products purchased systematically (or almost) by French households and which are suffering primarily from this massive inflation.
The range on offer, even if it is complete, is less extensive, with 10k to 15k items on offer compared with 35k-40k in-store. The drive is therefore used for a certain type of purchase and the big loser is undoubtedly the ultra-fresh products purchased via other channels (direct, organic, etc.).
“Better” is progressively being associated with “few”, between inflation and a drop in purchasing power, repeated food scandals, awareness of excessive consumption… And in this context where we tend to move towards an impoverishment of consumption, every initiative, every effort will be appreciated by French shoppers.
Uncertainty often leads to innovation…
Supporting shoppers, building their loyalty… Real challenges for which Big Data makes a (major) contribution. Thanks to it, it is possible to understand the purchasing behavior of individuals to improve the distribution of promotional messages, to work on individualized mass communication. How ? By using personalization and ultra-personalization of messages, with the aim of generating sales, and creating loyalty between the retailer, the brand and the shopper.
At Lucky cart, we transform this same Big Data into simple, efficient, precise and fun operational devices, real powerful commercial levers for our customers.
Our proprietary technologies allow us to exploit the very essence of first party data, the data we collect from our retail partners. With more than 88% of Drives covered, 18.5 million shoppers who can be activated, we can exploit over 20 billion lines of receipts.
We process it using Artificial Intelligence: more specifically, we create and analyse the purchase profiles of Drive shoppers to propose, individually, offers or activations that correspond as closely as possible to their consumption habits.
Our methods applied in data science allow us to respond daily to the new challenges of online commerce such as building loyalty or encouraging people to try another brand, to discover another range of products, etc. These profiles are dynamic, they are updated in real time. This allows brands to have the most detailed and realistic understanding possible.
« We work on Big Data with a strong food focus, both brands, national brands, private labels with a specialization in e-retail »
– Romain Charles, CEO
The consumer landscape is changing and evolving rapidly. The end consumer who, due to market, societal and international developments, needs to be more engaged, and for the offers proposed to be more relevant to him… It is those who move forward in this direction who will be successful today, but especially tomorrow.
* Etude OpinionWay pour Bonial – May 2022