As inflation and supply chain issues cause prices to increase, consumers are coping by shifting their shopping habits. For many shoppers, bargain shopping is a clear solution because it allows them to save money without having to cut their purchasing significantly.  

As retailers work to meet consumers' needs, they face the challenge of offering compelling discounts without eroding their bottom line. For businesses, this shift poses both a challenge and an opportunity: adapt to the new consumer mindset or risk losing money and market share. However, there are a variety of ways to attract price-sensitive customers while also building brand identity—including loyalty programs, strategic promotions and intentionally-designed customer experiences—that draw in-store traffic and provide a competitive advantage.  

Inflation’s impact on consumer spending patterns

Rising costs are reshaping consumer behavior. While previously, shoppers may have made purchasing decisions primarily on the factors of perceived quality or store proximity, many consumers have become increasingly focused on cost-saving tactics, seeking out the best deals available.  

• ‍54% of consumers expect grocery prices to continue increasing.
• ‍57% are actively shopping where they can find the best deals—a 23% increase from the previous year.
• ‍51% want exclusive discounts tied to their loyalty.
• ‍93% of U.S. consumers would make repeat purchases from brands offering good discounts.
• ‍48% avoid brands that don’t offer deals.
• ‍33% used more coupons in grocery stores in 2024 than in 2023.

These numbers paint a clear picture: consumers are reacting to inflation by changing their whole approach to spending. This drastic behavioral shift makes it likely that these behaviors could continue even after inflation eases, having become habitual. Customers may feel a newfound pride in finding a deal or being rewarded with a personalized coupon, leading to longer-term loyalty to businesses that offer them a combination of value and a positive experience. For example, as consumers are reallocating their budget, some are choosing to shift away from eating out to spending more in grocery stores. A Yale study found that consumers would rather buy a more expensive, higher quality fish at a grocery store than spend $20 on a restaurant meal. Consumers are shifting from convenience to value-driven quality.

This behavioral shift points to the need for businesses to rethink their pricing strategies. Savvy consumers are taking their business to the brands who offer them exclusive deals, personalized experiences, and unique incentives.  

Cross-industry loyalty trends

One way that retailers can attract customers is through creating loyalty programs. With the promise of individualized deals, shoppers seek out savings one membership at a time. These programs often offer tiered rewards, special partnerships with other brands and timely messages to remind consumers of upcoming savings. Loyalty is no longer an individual marketing initiative but has become an essential part of the customer journey. Loyalty programs must be backed by data to ensure they are effectively meeting consumer needs and preferences. By analyzing purchasing patterns, engagement metrics and other feedback, retailers can customize their loyalty programs to deliver personalized experiences and tangible value to consumers, ultimately driving customer retention and satisfaction.

Retail and grocery

Across retail and grocery stores, consumers value personalized deals and rewards more than ever. One study found that “seventy-one percent of consumers expect companies to deliver personalized interactions. And seventy-six percent get frustrated when this doesn’t happen.” It is not enough to have a membership program; consumers want targeted sales and deals that are tailored to their specific shopping habits. These programs go beyond points to build trust and long-term engagement.  

Fuel and convenience

The fuel industry offers a compelling case study: in some markets, loyalty program purchases account for 70% of transactions and, even in more mature markets, loyalty purchases range from 25%-40%. Consumers are choosing gas stations based off more than just posted prices. They're selecting their gas based off rewards such as cents off per gallon or product rewards inside convenience stores.  

Psychology of bargain hunting

Emotional drivers

Bargain shopping isn’t just a financial decision—it’s an emotional one. The act of finding a deal provides a sense of control and satisfaction, especially during times of economic uncertainty. Chasing a deal also increases a sense of urgency in shoppers. Bargain hunters feel pressure to act fast or lose their opportunity to save money. Consumers feel empowered when they believe they have “won” at shopping.

Experiential drivers

Bargain shopping can also be linked to better brand experience. While some businesses fear that lowering prices may decrease value perception, other brands are offering unique experiences to show their value in other ways. An article by The Shelby Report mentions that consumers just smelling freshly baked goods in a grocery bakery section invokes positive emotions leading to impulse purchases. Experiences such as fresh bakery sections, shopping carts that promote family-friendly or accessible shopping experiences and free samples can improve value and experience perception while keeping costs friendly for consumers.  

Using newspaper or magazine coupons for discounts is no longer sufficient to remain competitive in today’s market.  Stores must incorporate more digital and personalized experiences and connections throughout the purchase and post-purchase journey to thrive. This includes offering AI-powered personalization to tailor offers to individuals, as well as creating more interactive and engaging in-store experiences.  

How to win

Bargain shopping due to inflation is not just a temporary phase; it is a large-scale shift in consumer habits and behavior. Consumers are more intentional, price-conscious when it comes to shopping. An article by McKinsey & Company found that grocery retailers who engage in personalization at scale see a 1 to 2 percent increase in total sales and an even higher increase for other retailers. The article also reports that these loyalty programs can “reduce marketing and sales costs by around 10 to 20 percent.” According to PWC, 65% of U.S. consumers find a positive experience with a brand more influential than great advertising.  

Considering these facts, it is clear that creating better customer experiences goes beyond having competitive prices. Customer satisfaction requires retailers to invest in the larger shopping experience. With better technology that can track consumer spending habits and create a more personalized experience, retailers can stand out against their competitors and draw in the highly sought loyalty crowd.

‍