How Can Retailers Best Attract a Growing Cohort of Value-Seeking Consumers, Beyond Price?

When it comes to the concept of the value proposition, one longstanding belief has placed one central metric at the core of the question: pricing.

However, according to a recent Deloitte report titled "The Value-Seeking Consumer: Competitors Could Lose Out to Brands Offering More than Low Prices," the findings expanded that notion beyond the aforementioned truism into more nuanced territory.

Chief among the results — price isn't everything. Per a regression analysis of nearly 300 brands, Deloitte researchers found that price perceptions can predict between 60% to 90% of value perceptions. However, that leaves between 10% to 40% of perceived value on the table, and that portion can be attributed to brands executing on key fronts such as quality, attitude, and trust.

"MVP brands [brands which offer more value for the price] deliver more than just competitive prices — they can provide added value that attracts consumers, even when their products cost more. MVPs focus on product and service quality and reliability. They may also be perceived as having more friendly attitudes that build consumer trust. Lower-value brands looking to make the shift to being an MVP can do so by emulating these attributes, in a way that aligns with their unique brand identity and business approach," said Mike Daher, vice chair and U.S. consumer industry leader, Deloitte.

Value-Seekers on the Rise, Particularly in Higher-Income Circles

Defining value-seekers as those who display three or more cost-conscious, deal-driven, or convenience-sacrificing behaviors per month across all purchasing sectors, Deloitte indicated that about four-in-10 (or 40%) of the 9,000 American consumers surveyed fall into this group.

Citing persistent inflationary pressures and ongoing economic turbulence, the study authors suggested that value-conscious behavior was notably on the rise, particularly in evidence since peak inflation surfaced in 2022.

Of those who were classified as value-seekers, higher-income earners showed the greatest degree of discretionary commitment — planning to reduce their spending by 50% to 60% on discretionary categories as compared to their peers.

On the other hand, a significant number — 40% — of value-seeking consumers engage in this behavior out of necessity, coming from lower-income, middle-aged households. With that being said, 23% of respondents who earn $200,000 or more annually were also categorized as value-seekers.

"Consumers are more discerning than ever, weighing the value they receive with their purchases. And while low-income earners may look for value out of necessity, higher-income households increasingly put value at the top of their shopping lists. As economic uncertainty lingers, consumers across demographics actively seek brands that deliver value, whether through quality, trust, friendly attitudes, or a combination thereof," Daher said.

"No matter the industry sector, MVP brands that get pricing right and boost consumer perceptions of their value will be well positioned to attract consumers, increase their margins, and build long-term loyalty," he added.

Deloitte pulled data suggesting that, over the course of the past three years, roughly 2% of spend share migrated to brands identified as MVP players in the grocery, restaurant, and hotel space — a more marginal 0.6% shift was noted in apparel.

However, quality was identified as the top driver of value in the grocery, hotel, and restaurant segments, with quality and reliability tying in automotive. Concerning apparel retailers, delivery speed was singled out as the most central metric.