Consumption in times of crisis: retailers signal the end of gratuity

Every year for the past 10 years, L'Echangeur BNP Paribas has taken stock of the retail ecosystem. This year has been particularly marked by inflation, prompting customers to consume differently and retailers to innovate in order to stand out from the crowd by means other than promotions.

Since the Internet industrial revolution of the 90s, omnichannel retailing has become the order of the day. The online world is becoming more human and the offline world more digital. But today's inflationary environment is shifting the balance and changing purchasing behaviour. For example, many consumers are giving up certain "pleasures" because their purchasing power is too low. According to an Ipsos survey, 44% of French people said they planned not to buy foie gras for Christmas this year.

Brands announce the end of free gifts

This way of consuming that focuses on savings is having an impact on retailers, who are themselves experiencing inflation in their purchases of raw materials. They may have embarked on a promotional race at the start of the crisis, but this approach is no longer profitable for them. Today, to break even, they are putting an end to free offers. One example of this trend is Netflix, which has stopped free account sharing. In the retail sector, Zara, H & M and Zalando have made return orders chargeable.

Among food retailers, a sector that has seen 20% cumulative inflation in two years, the Echangeur BNP Paribas report highlights the disappearance of paper leaflets. While this may be explained by a CSR approach, the 40% increase in the price of paper has accelerated this decision for many chains. Yet paper leaflets are an essential point of contact for retailers. They have therefore set about digitising this promotional catalogue.

Helping customers cope with inflation

As well as sending catalogues by message or email, retailers need to innovate to encourage purchasing power in ways other than just by offering promotions. This is the case, for example, with Carrefour, which in November 2022 rolled out the "find cheaper" button on its website. The principle is simple: with just one click and thanks to artificial intelligence, the retailer offers its customers similar but cheaper choices.

In the UK, discount supermarket Iceland is also positioning itself to help its customers reduce their bills, but by focusing on the energy bill. For example, the packaging of certain food products indicates the most economical cooking method. Customers of this supermarket are now informed that cooking breaded fish sticks with an air fryer uses less energy than in the oven

From segmentation to personalisation

The emergence of artificial intelligence as a key tool in this drive to save money is a major boost. In addition to its "find cheaper" button, Carrefour has launched its own chatbot: Hopla. This offers personalised shopping lists to customers, who simply need to enter a few details, such as the number of people in their household, how often they shop (weekly, monthly, etc.) and their budget. The AI then prepares a detailed shopping list for customers, which they can order directly from the site, or go and buy in a physical outlet.

According to Mathieu Joly, the arrival of generative AI has enabled retailers to move from hyper-segmentation to true personalisation. "Before, a retailer knew that his customer liked beer and sent him targeted promotions on Heineken. With AI, he now knows that his customer drinks Kronenbourg. In short, this technology makes it possible to follow the logic of one customer, one message."