Dive Brief:

• Consumers who are feeling the pinch of inflation are seeking value over loyalty and reducing their spending, according to a Capgemini report released Tuesday.
• More than 3 in 5 consumers say they are spending more time online searching for the best deals and cutting back on non-essential items, Capgemini found. 
• Though persistent price increases are wearing on shoppers, consumers say they prefer transparent price increases over quality or product-size reductions. “Value today goes beyond price and quality, it’s built on fairness, transparency, and emotional connection,” Dreen Yang, global consumer products and retail leader at Capgemini, said in a prepared statement.

Dive Insight:

Though there are signs that inflation is beginning to wane, consumers are taking a mixed approach to their spending, seeking value as they would during inflationary times and cutting back on non-essential items as they often do during recessionary times.

“In inflationary times, you do things like you buy in bulk because, as prices get higher, you want your dollar to go farther,” Kate Muhl, VP analyst at Gartner, told CX Dive last month. During recessionary times, consumers are more preoccupied with saving. 

Amid such economic uncertainty, consumers continue to prioritize value at the expense of brand loyalty. Nearly three-quarters will switch brands if competitors offer lower regular prices.

But how a brand decides to price their items also plays a role in loyalty. 

Two-thirds of consumers say they would prefer a small price increase over non-signaled size reductions, and 71% say they will switch if their current brand reduces pack size or product quality without clear communication.

"This shows consumers value honesty more than a hidden discount,” Mark Ruston, global retail lead at Capgemini, said in an email. “As AI increasingly automates price comparison, the only sustainable competitive advantage is genuine fairness in pricing architecture.”

Consumers view volume-based discounts, personalized coupons, and loyalty member-only pricing as very fair, but they find policies like different prices by sales channel and shrinkflation as highly unfair. 

Capgemini warns that while such policies as shrinkflation might boost short-term profits, they risk eroding brand reputation and long-term loyalty.