Inflation impact on Retail Customer Experience


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Business publications and news outlets bombard us with news about rising inflation and upcoming recession every single day. Our lives are impacted by the higher costs of everything we need as consumers, but we also are facing business challenges as providers of goods and services.

In the past few years, retail customers have been through a lot. Having a supply chain breakdown, experiencing social isolation, or having difficulty finding products all combine to create a negative effect. Consumers are on edge as prices rise, and brands as well as retailers are keenly aware of this. Because of this, 29% of retailers are concerned that any price change may result in negative consumer reactions

Most business leaders know that there are limits to consumer price elasticity and hard decisions will have to be made in order to maintain the proverbial “ship” afloat.

  • How long can we absorb cost increases without raising consumer prices?
  • How many customers are we prepared to lose by passing the cost increases to them?
  • Where can we cut our operational expenses?

Of course, there are no simple, binary answers to these questions. However, it is critical to remember that this storm will pass too, but decisions that may help you to weather this storm may cause structural damage to your vessel if you are not careful.

When a company is looking to cut operational costs it is far too often an investment into a retail customer experience comes first on the chopping block.

Retail Marketing Strategy – Tale of two brands

They say history does not repeat itself, but it rhymes. During the 2007 recession, most brands closed up the hatches to weather the storm. At that time if you were looking to buy a sailboat, computer images and magazine ads were the only means for “experiencing” a product that sells for hundreds of thousands of dollars. No dealer in the US had a product in their inventory to actually come aboard and take for a sale. No dealer, except the one who signed with a European sailboat brand whose name starts with “B”. They took massive loans to finance boat inventory in the dealer’s showrooms when American boat manufacturers were waiting out the recession. Today, nearly every second boat sailing American waterways proudly carries the brand “B” name on its bows. Are they better-built boats? Hell, no. As a sailor with a few thousand miles of open ocean sailing experience, I can categorically say that the “B” boats are substantially lower quality in design and construction than most brands they annihilated by gambling on providing a better retail customer experience. Nor they are lower priced.

Another example is an automotive brand starting with “H”. They remembered what the word “brand” means. To consumer brand means trust, and while other competitors reduced their call center staff that helped and supported their customers, the “H” launched a buy-back program in the middle of a recession. They allowed Americans to buy new cars that could be returned if they lost their jobs. Sales for “H” rose 5% in January and February 2009, a time when much of the rest of the auto industry experienced steep losses. This move established their brand in the United States consumer’s minds where before their name was a favorite target of late-night TV comedians.

Consumers are now unusually anxious because of the rise in the price of products, but consumer resistance to higher prices can be reduced by an opportunity to have a highly positive experience of the product prior to purchase.

In Store Product Demo is a part of Retail Marketing Strategy

Instead of reducing the volume or quality of your product while maintaining your price, you can explore an in-store product demo as a better retail marketing strategy. The moment you do this, you take your prospect’s eyes away from the price and let them see for themselves how the value trumps the price. Leverage the promotional scheduling calendar to make in-store demos an ever-present part of your store experience to make your customers focus on their experience of new products instead of sticker shocks of the products they used to buy.

According to Shopify, Store Demo of products helps you test new brands or products, enhance the in-store experience, improve customer loyalty, Increase sales and gather customer feedback.

Shopify also advises to do the following before embarking on store sampling: review inventory levels, consider hiring brand ambassadors, combine demos with promotions to boost sales, and be selective with demo products and promotional scheduling during business peak hours.

The impact of inflation on customers cannot be overlooked. It is a reality that has come to stay and retailers must combat it to ensure viability and profitability. It has been established that price reduction and discounts are not the best strategies to achieve the best retail customer experience. Adopting an in-store product demo strategy seems to be a more feasible approach to tackling consumers’ responses to inflation. Retailers should also be vigilant to observe new consumer behavior through occasional market research.

In conclusion

Facing inflationary pressure, many retailers and established brands are prone to making exactly the wrong decisions – serving fewer products at the same price as before, or reducing customer service. These decisions are designed to defend decreasing profit margins at the expense of their customer’s experience. Yet it is their prior extensive investments in their customer experience that made them what they are today. Betraying the trust of your customers opens opportunities for fledgling startups who care more about the cost of customer acquisition than the next quarter’s margin. The in-store product demo is the best tool of experiential marketing strategy to steal customers from those established brands that are spooked by inflation.

Gregory Yankelovich
Gregory Yankelovich is a Technologist who is agnostic to technology, but "religious" about Customer Experience and ROI. He has solid experience delivering high ROI projects with a focus on both Profitability AND Customer Experience improvements, as one without another does not support long-term business growth. Gregory currently serves as co-founder of, the software (SaaS) used by traditional retailers and CPG brand builders to create Customer Experiences that raise traffic in stores and boost sales per customer visit.


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