Flight to value
Rising food and grocery store prices and cost of living Image: Tero Vesalainen
For many, May is their favourite month, probably because of the two Bank Holidays. May is also the month of the party. It usually starts and ends with one, that’s for sure!
The harsh realities of life kick in soon after, however. The next day at work, typically. But the complicated times we live in, mean there are additional crosses to bear. Kantar’s reading of the latest grocery stats shine a spotlight on one pressing matter. UK shoppers are seeking out value as grocery inflation hits an 11-year high, and are looking to retailers to help them cope with the rising cost of living.
The analysts find that take-home grocery figures show drops across the board – supermarket sales fell by 5.9% over the 12 weeks to 17 April 2022. For the first time since the pandemic began, sales are also in decline by 0.6% compared with two years ago, as the period now includes the start of the first lockdown when only essential shops were allowed to open.
Like for like grocery price inflation is at 5.9% this month, its highest level since December 2011.
“The average household will now be exposed to a potential extra £271 per year,” writes Fraser McKevitt,
head of retail and consumer insight, worldpanel division, UK. “A lot of this is going on non-discretionary, everyday essentials which will prove difficult to cut back on as budgets are squeezed. We’re seeing a clear flight to value as shoppers watch their pennies.”
It falls to the food and beverage industry to adapt.
Value is typically used as shorthand for cheap, and few brand teams find inspiration in a race to the bottom.
While the number of trips we’re making to the supermarket has remained steady this year, people aren’t buying as much when in store and the average basket size has dropped by 4.5% to £22.39.
Brands could use the current situation to promote beyond price and promote the qualities of heritage, integrity, longevity, authenticity and transparency that translates into value to a consumer. They may prefer to spend more money on something that will last them longer or which will deliver greater reward. Snacks that encourage getting friends and family together when a trip out is just too expensive; drinks that promise health as well as flavour add value.
If consumers feel that little bit better as a result, the few extra pennies they part with may represent a bargain.
With all the pressures people are feeling, the brands that genuinely demonstrate that they share their consumers’ values are the brands that will more often find themselves in the consumers’ shopping basket.
Bryan Urbick, one of the founding directors of the Consumer Knowledge Centre, pointed out some years back that though consumers are far more cautious in their spending attitudes, this does not however make them thrifty, it makes them more aware of, and more demanding of value.
And this is where today’s brands have a perfect opportunity to shine. Consumers want to know that whatever they spend their money on is definitely worth it.
We’ve another Bank Holiday coming too.
- Rodney Jack, editor, Food & Drink Technology.
Keep in touch via email: [email protected] Twitter: @foodanddrinktec or LinkedIn: Food & Drink Technology magazine.
