Inflation’s Impact on Retail Businesses
Inflation reduces the purchasing power of consumers and the price of products increases faster than wages and incomes. For retailers, it is important to recognize this particular situation since inflation can affect the way customers perceive prices. They can also become more demanding in terms of value for money.
Click here for useful tips to keep customers during inflation.
When consumer purchasing power is at its lowest, they still continue to buy essentials like food, gasoline, medicines and clothing.
Indeed, regardless of the economic situation, we must continue to feed ourselves, find housing, move around, take care of ourselves and have clothes on our back!
Essentials are considered stable goods because their demand remains relatively constant, even in times of inflation. Essential goods are part of what sells best during inflation.
In times of inflation, some consumers anticipate future price increases. The purchase of long-lasting goods such as furniture, cars, motorized recreational vehicles or household appliances is rather common during periods of inflation.
To avoid paying more in the future, some consumers buy goods that will not have to be replaced during this period.
Long-lasting goods are often more attractive during periods of inflation because they are long-term investments.
Periods of inflation are sometimes difficult times for some people. Buying is an action that can soothe self-ache for some. Sweets, fashion accessories, toys, video games are affordable products that can attract the attention of consumers looking for small daily pleasures.
In times of inflation, consumers may be more careful in their spending and will opt for low-cost items that offer good value for money.
The cost of importing can easily increase during periods of inflation and this can affect the prices of some common products. Local products can then become less expensive than imported products in times of inflation, because they do not have to cover the costs of transport and importation.
Besides the price, consumers can make an ethical decision by supporting the local economy with the purchase of local products. When we think about what sells best during inflation, local products certainly are winners!
In times of inflation, bulk products are an economical and eco-responsible solution.
Dry foods such as nuts, flour, dried fruits, cereals and other similar products offer better value for money and reduce costs associated with packaging.
Bulk products are also more sustainable and environmentally friendly options, as they reduce packaging waste and promote the reuse of containers. No wonder many consumers turn to bulk products during periods of inflation!
When inflation hits the economy hard, second-hand goods gain in popularity.
Indeed, second-hand products like cars, electronics, clothing or furniture can enjoy popularity among consumers since they are at a reduced price compared to a new product.
Example of second-hand products:
- retro items
- children’s toys
- musical instruments
- seasonal items
- sports equipment
The purchase of second-hand products increases the longevity of certain products and indirectly becomes a sustainable and ecological tool. These products sell best during inflation because they also allow consumers to find various unique quality items at competitive prices.
Learn more on the sale of these 11 products often sold on consignment!
In times of inflation, second-hand items can therefore sell best by offering an economical and ecological option for budget-conscious and environmentally conscious consumers.
Substitutes are common products that we can replace with a more affordable option in times of inflation. For example, replacing meat with vegetable proteins and picking generic brands are all substitution options interesting for consumers.
The consumer seeks to save where he can in times of inflation, which explains the decline in popularity of brands and generic choices benefit from it.
8. Long-Term Payment and Subscriptions
When prices rise due to inflation, consumers may seek to lock in fixed costs to avoid future increases. Long-term payments and subscriptions, such as rental contracts or annual service subscriptions (e.g., magazines or streaming services), often offer a flat rate over an extended period.
It is for this reason that in times of inflation, long-term payments and subscriptions sell best.
Thanks to their financial stability and their cost predictability, long-term payments and subscriptions are good sellers in times of inflation!
In order to avoid additional costs related to travel, some consumers will opt for home services in times of inflation. In search of savings and convenience, consumers then use grocery delivery, household cleaning, hairdressing and home repairs or maintenance without having to move.
This type of service will save consumers time and thus they can invest it more intelligently elsewhere to cope with inflation and the increase in the cost of living.
In conclusion, knowing what sells best during inflation allows retail businesses to adjust their offer in order to maximize their profit during a difficult economic period. The products that sell best during inflation are also mostly eco-responsible and durable. Attract new customers with this approach and adopt good practices that will make your business a sustainable and profitable business during a period of inflation.