Inflation Shifts Buying Habits—How SMEs Can Win

Stable prices don’t mean shoppers “go back to normal.” They go back to choosing.

Capgemini’s “What matters to today’s consumers 2026” report (Oct 2025, N=6,000) found that nearly half of consumers are responding to cost pressure by buying smaller quantities or trading down (think canned fruit instead of fresh). And here’s the twist most brands miss: as price pressure eases, private label preference has dropped from 65% (late 2024) to 44% (2026). People aren’t simply chasing the cheapest option anymore—they’re recalibrating what “value” means.

For Singapore SMEs in retail and e-commerce, this is an opening. Not because consumers are suddenly splurging, but because they’re getting picky: trust, consistency, and transparency are becoming the deciding factors. In this post (part of our “AI dalam Peruncitan dan E-Dagang” series), I’ll break down what the inflation hangover is doing to customer behaviour—and how SMEs can use AI-driven retail analytics, demand forecasting, and digital marketing to capture budget-conscious shoppers without racing to the bottom on price.

What inflation changed (and what it didn’t)

Inflation didn’t just reduce spending—it reshaped shopping patterns. When households feel squeezed, they optimise the whole routine: basket size, trip frequency, meal choices, and brand mix.

The “smaller basket, more often” pattern is real

The report highlights behaviours we’re seeing across many markets: more coupon usage, smaller and more frequent trips, and fewer meals out—especially among low- and middle-income households. The important implication for SMEs is operational, not just promotional:

• Customers are making more micro-decisions (each purchase is a mini negotiation)
• They’re comparing prices more often (even subconsciously)
• They’re less tolerant of “bad surprises” (out-of-stock, inconsistent quality, unclear sizing)

If you run an online shop, this often shows up as more sessions per purchase, higher cart abandonment, and higher sensitivity to delivery fees or minimum spends.

People traded down—but they didn’t stop caring

Trading down isn’t a values shift; it’s a budgeting move. Many shoppers still want quality, but they want it in the right places: staples, health-related items, products for kids, and anything tied to daily routines.

That’s why “value” in 2026 is less about the sticker price and more about:

• Reliability (does it perform the same every time?)
• Transparency (what am I paying for, what changed?)
• Control (can I buy a smaller pack, pause a subscription, swap variants?)

For SMEs, the message is straightforward: stop marketing like your customers are irrationally price-obsessed. They’re budget-aware and risk-aware.

The private label trust problem: why preference fell from 65% to 44%

Private label grew during peak inflation because it was the fastest way for shoppers to reduce cost without giving up the category. But the Capgemini data points to a sharp pullback as prices stabilise: 65% preference in late 2024 → 44% in 2026.

The cause isn’t mysterious. It’s trust.

Shrinkflation made customers suspicious

Shrinkflation—smaller packs for the same price—trained consumers to scrutinise value claims. When customers feel they’re being tricked, they don’t just switch brands; they switch belief systems. They start reading labels, checking weights, scanning reviews, and asking friends.

Private labels are often hit harder because shoppers already assume:

• quality varies by batch
• ingredients are “cheaper substitutes”
• product changes aren’t communicated

Singapore SMEs that sell house brands (or distribute lesser-known brands) can’t afford that trust gap. The reality? Your marketing job is now partly a reassurance job.

“Affordable” needs proof, not slogans

Most companies get this wrong: they try to rebuild trust with taglines.

Trust comes back when you prove three things repeatedly:

1. Consistency: same taste, same fit, same performance
2. Disclosure: clear sizing, weight, origin, ingredients, warranty
3. Accountability: fast customer service, easy returns, honest reviews

If you do private label, treat every product page and ad as a “trust document,” not a poster.

What Singapore SMEs should do now: market “value” like a system

Value isn’t one message. It’s the sum of pricing, pack architecture, inventory reliability, and post-purchase experience. Digital marketing amplifies what’s already true—so fix the system, then promote it.

1) Offer “budget control” options (and market them clearly)

Answer first: Shoppers want flexibility more than they want the absolute lowest unit price.

Practical plays SMEs can launch quickly:

• Smaller pack sizes for trial and tighter budgets
• Mix-and-match bundles (choose 3 sauces, 5 snacks, etc.)
• Subscribe-and-save with pause (don’t lock people in)
• Price locks for essentials (even 30 days can feel stabilising)

Then market it with specifics:

“Same recipe. Smaller pack. Lower out-of-pocket today.”

That sentence does more than “great value” ever will.

2) Rebuild private label trust with product transparency content

Answer first: Transparency content converts because it reduces perceived risk.

What to publish (and reuse across ads, Shopee/Lazada listings, and social):

• “What’s inside” ingredient highlights (plain language)
• Weight/size comparisons (old vs new if you changed it)
• Sourcing notes (where it’s made, quality checks)
• Simple testing demos (absorbency, durability, taste tests)

If you’re worried that transparency invites scrutiny—good. Scrutiny is already happening. You’re just deciding whether it happens with or without you.

3) Stop blanket discounting; use segmented offers

Answer first: Discount everyone and you train everyone to wait.

Instead, segment offers based on behaviour:

• New customer: trial-size bundle + free shipping threshold
• Repeat buyer: “buy again” replenishment coupon on essentials
• High AOV customer: bonus item instead of % discount
• Lapsed customer: targeted comeback offer with a deadline

This is where SMEs can punch above their weight: you don’t need a huge budget, you need clean targeting and simple automation.

Where AI fits in (AI dalam Peruncitan dan E-Dagang)

AI isn’t here to make your brand sound smarter. It’s here to make your decisions less guessy.

AI-driven demand forecasting: reduce the “out-of-stock trust tax”

Answer first: Nothing kills value perception like stockouts on staples.

If you sell essentials (food, household, personal care), AI-assisted demand forecasting helps you plan around:

• payday cycles
• seasonal spikes (Chinese New Year, Hari Raya, year-end gifting)
• promo-driven surges

Even a lightweight approach works: forecast at the SKU level using historical sales + promo calendar + lead times. Then measure stockout rate weekly. Stockouts aren’t just lost sales—they’re a signal to customers that your brand is unreliable.

Personalised recommendations: value is relevance

Answer first: Personalisation should reduce decision effort, not push more products.

Use recommendations to:

• suggest cheaper alternatives when a customer browses premium options (“same function, lower price”)
• promote trusted replenishment items based on past purchases
• surface “bundle complete” suggestions (items commonly bought together)

A good recommendation engine behaves like a helpful store assistant. A bad one behaves like a loud billboard.

Customer behaviour analytics: find the new “value moments”

Answer first: Your data already shows where shoppers feel the pinch.

Look for these patterns:

• spikes in cart abandonment after shipping fee reveal
• higher conversion on smaller sizes
• customers switching variants (fresh → canned equivalent; premium → basic)
• rising use of onsite search terms like “refill,” “small,” “promo,” “bundle”

Turn those patterns into campaigns. If your top internal search term is “small pack,” that’s a product strategy signal—not just a SEO note.

A simple digital marketing playbook for 2026 (that SMEs can actually run)

Answer first: Win on trust + clarity, then amplify with performance marketing.

Here’s a practical 4-step plan I’ve seen work for small teams.

Step 1: Build “trust assets” once, reuse everywhere

Create a set of reusable modules:

• 3 product photos that show scale/size
• 1 short demo video (15–30s)
• 5 FAQs (ingredients, origin, returns, shelf life, sizing)
• a comparison chart (your product vs typical alternative)

These assets improve conversion and reduce customer service load.

Step 2: Run two ad angles, not ten

Pick two angles and execute well:

• Angle A: Budget control (smaller packs, bundles, price locks)
• Angle B: Proven quality (tests, reviews, guarantees)

Test creative, not strategy chaos.

Step 3: Use social proof that sounds local and specific

Generic reviews don’t reassure. Specific reviews do.

Prompt customers with questions that create better UGC:

• “What did you replace with this?”
• “How long did it last in your household?”
• “Which variant did you try first, and why?”

Step 4: Measure the metrics that actually track trust

Don’t obsess only over ROAS. Add trust signals:

• repeat purchase rate (30/60/90 days)
• return/refund rate by SKU
• review volume and average rating by SKU
• stockout rate on top 20 SKUs
• customer service tickets per 100 orders

When those improve, paid performance usually improves with them.

People also ask: quick answers SMEs can act on

Are consumers still buying private label in 2026?

Yes, but with more skepticism. Capgemini reports preference fell from 65% (late 2024) to 44% (2026) as shoppers weigh quality and trust more heavily.

What’s the best way for a small brand to compete during inflation?

Compete on clarity and consistency: transparent product information, reliable inventory, and offers that give customers budget control (smaller packs, flexible bundles).

How can AI help an SME retailer in Singapore?

AI helps most in three places: demand forecasting (fewer stockouts), personalised recommendations (higher conversion), and customer behaviour analytics (smarter targeting and merchandising).

What to do next (and what to stop doing)

Inflation trained consumers to be careful. Stable prices won’t un-train them. The brands that grow in 2026 will treat “value” as something they can prove—in product details, in inventory reliability, and in how they communicate changes.

If you’re an SME in Singapore selling private label or lesser-known brands, my strong take is this: stop assuming customers only want cheaper. They want fewer regrets. Build for that, then let digital marketing scale it.

Where are your customers hesitating right now—at the product page, at shipping, or after the first purchase? That’s the first place to fix, and it’s also your next best campaign angle.