Inflation Shifts Buyers: Build Trust, Not Discounts

January 2026 is a weird moment for retail and e‑commerce. Prices aren’t rising as violently as they were, but shoppers haven’t “gone back to normal.” They’ve learned new habits—smaller baskets, more deal-checking, and a sharper eye for whether a product is actually worth it.

Capgemini’s What matters to today’s consumers 2026 report (Oct 2025, N=6,000) puts a number on what many Singapore SMEs are seeing in-store and online: nearly half of consumers are buying smaller quantities or trading down to lower-cost options. Not skipping purchases entirely—just reshaping them.

Here’s the part most businesses miss: as inflation stabilises, people aren’t automatically loyal to the cheapest option. Private label (store brand) preference in the same research dropped from 65% in late 2024 to 44% in 2025. That’s a big swing, and it’s a signal. Shoppers will try budget options when they’re squeezed, but when the panic eases, they re-rank their priorities: quality, consistency, transparency, and trust.

This post sits in our “AI dalam Peruncitan dan E‑Dagang” series, so we’ll connect the consumer shift to practical actions: how Singapore SMEs can use AI-driven retail analytics, smarter targeting, and tighter messaging to protect margins and generate leads—without racing to the bottom on price.

What inflation actually changed (and why it’s sticking)

Answer first: Inflation trained customers to shop like analysts—comparing value, scanning for shrinkflation, and splitting purchases across channels.

During peak inflation, shoppers didn’t just “buy less.” They changed how they buy:

• Smaller, more frequent purchases instead of big weekly baskets
• More coupon and promo reliance, especially among low- and middle-income households
• Trade-down substitutions (e.g., canned fruit instead of fresh)
• Fewer meals out, shifting more spending into groceries and essentials

For SMEs, this matters because these behaviours don’t disappear overnight. Once customers learn to budget-scan, they keep doing it.

The trust problem: shrinkflation made everyone suspicious

Answer first: Shrinkflation turned “budget” into a trust issue, not just a price issue.

When packs get smaller or ingredients change quietly, customers feel tricked. And they don’t only blame big brands—they blame the whole category. That’s one reason private label enthusiasm cooled as prices stabilised: shoppers started asking, “Am I saving money, or just getting less?”

If you sell private label products (or you’re an SME brand competing against them), your marketing job is the same: remove uncertainty.

The private label swing: why 65% became 44%

Answer first: Private labels surged because shoppers needed relief; they declined because shoppers started re-evaluating quality and reliability.

The Capgemini numbers are the headline:

• 65% preferred private labels in late 2024
• 44% preferred private labels in 2025

That drop doesn’t mean customers hate private labels now. It means value is being recalculated. When inflation eases, shoppers give themselves permission to be picky again—especially for products tied to health, taste, durability, or social signalling.

What this means for Singapore SMEs

Answer first: SMEs can win by positioning around reliable value, then proving it with content, reviews, and data-backed messaging.

In Singapore, customers have fast access to alternatives—marketplaces, Q‑commerce, chain supermarkets, and cross-border sellers. If your pitch is “we’re cheaper,” you’re one competitor away from being irrelevant.

A stronger approach is:

• Lead with one clear value promise (quality consistency, ingredients, sourcing, warranty, customer support)
• Support it with proof (UGC, reviews, comparisons, certifications, transparent FAQs)
• Use AI to target and personalise so you’re not overspending to reach the wrong buyers

Private label brands can do this too. A private label doesn’t need to feel “budget.” It needs to feel dependable.

3 digital marketing plays that work in a cost-conscious market

Answer first: The winning playbook is precision targeting, proof-heavy creative, and measurement that ties to margin—not just clicks.

This is where many SME campaigns underperform: they optimise for reach and cheap clicks, then wonder why leads are low quality or why buyers disappear at checkout.

1) Sell “total value,” not the unit price

Answer first: Customers are comparing outcomes (taste, longevity, convenience), not just dollars.

If your product costs more than a cheaper alternative, you need to say why in plain language. I’ve found that the simplest framing works best:

• Cost per use (for household goods, cosmetics, supplements)
• Portion math (for food, meal kits, snacks)
• Waste reduction (fresh vs frozen vs canned; bulk vs small pack)
• Replacement risk (“buy once” vs “buy twice”)

What to do this week:

• Add a “Why it’s worth it” block on product pages
• Turn the same logic into 2–3 short videos for social
• Build a comparison chart buyers can screenshot

A useful one-liner for ads: “Cheaper is only cheaper if it works.”

2) Use AI to find the “trade-down” segments—then tailor messaging

Answer first: Not everyone is trading down for the same reason, so your ads shouldn’t sound the same.

In AI dalam peruncitan dan e‑dagang, the practical advantage is segmentation. Even lightweight AI (or built-in platform tools) can help SMEs identify patterns like:

• Customers who reduced basket size but still buy premium items occasionally
• Customers who only convert on promos
• Customers who switch brands frequently (low loyalty, high sensitivity)

How to apply it without an enterprise budget:

1. Cluster by behaviour in your CRM/ecommerce data: frequency, AOV, promo usage, category mix
2. Create 3 message themes (Savings, Reliability, Upgrade)
3. Run creative tests where only one variable changes (headline or offer)

If you’re in Singapore retail, this is where you’ll feel the difference fast: you stop shouting one generic message at everyone.

3) Make trust measurable: reviews, returns, and repeat rate

Answer first: Trust is visible in your metrics—especially repeat purchases and return reasons.

If shrinkflation made customers suspicious, your job is to reduce perceived risk. The best trust signals are boring—but they work:

• Review velocity (new reviews per week)
• Review specificity (photos, “used it for X weeks,” “fits my Y”)
• Returns rate by SKU
• Repeat purchase rate by category

A simple SME dashboard I like:

• Top 10 SKUs by margin
• Top 10 SKUs by returns (and reasons)
• Top 10 SKUs by repeat rate

Then push marketing spend toward products with both margin and trust performance.

How to market private label products without sounding “cheap”

Answer first: Position private label as “smart choice” with proof, not as “low price” with excuses.

If you operate a private label (or you’re helping a retailer build one), your messaging should avoid defensive language. Don’t say “just as good as.” Say what it is.

A positioning template that converts

Use this structure across landing pages, marketplaces, and social:

1. Clear promise: what problem it solves
2. Quality proof: ingredients, manufacturing, testing, sourcing, warranty
3. Value proof: cost per use, bundle logic, subscription savings
4. Risk reducers: returns policy, responsive support, transparent FAQs

Example (grocery/snacks):

• Promise: “Consistent taste and portion size for everyday lunches.”
• Proof: “Packed in audited facilities; clear nutrition panel; batch date visible.”
• Value: “Family bundle saves 12% vs single packs.”
• Risk reducer: “Replace-or-refund within 7 days if damaged.”

That’s not fancy. It’s concrete. And it’s exactly what inflation-trained shoppers want.

People also ask: quick answers for SME marketers

Are shoppers still price-sensitive in 2026?

Yes. But price sensitivity now sits alongside trust and quality checks. Stable prices didn’t erase the budgeting mindset.

Should SMEs discount more during inflation?

Discounting works short-term, but it trains buyers to wait. A better approach is targeted promos (for the most price-sensitive segments) while your core messaging stays value-and-proof-led.

How can AI help in retail and e‑commerce marketing?

AI helps with demand forecasting, customer segmentation, product recommendations, and creative testing. For SMEs, the practical win is spending less to reach the wrong people.

What to do next (especially if you want better leads)

Inflation reshaped shopping habits, but the bigger change is psychological: customers now expect brands to prove value. And when private label preference can swing from 65% to 44% in a year, you can’t rely on “cheap” or “familiar” as your strategy.

If you’re a Singapore SME, pick one category where you want to grow and do three things in the next 14 days:

1. Rewrite your value promise in one sentence (no buzzwords)
2. Add proof assets (reviews, comparisons, FAQs, short videos)
3. Segment your campaigns so deal-seekers and quality-seekers see different messages

The next question worth asking isn’t “Will customers spend again?” It’s: when they do spend, will they trust you enough to choose you twice?