The continued cost-of-living squeeze is prompting consumers to switch their grocery spend to discounter supermarkets, such as Aldi and Lidl, as well as making shoppers less loyal to the grocery brands they buy from, the latest research from Pricer, the world’s most trusted provider of shelf edge automation and communication solutions, reveals.
Original research of 1,000 UK shoppers by Pricer revealed 92% are now price conscious, rising by +33 percentage points since 2021 before the cost-of-living crisis began, and increasing to 94% of Millennials and 96% of Gen Z. Almost nine in ten (87%) say they now actively seek out more deals and discounts when shopping for groceries – up from 60% in 2021, a +27 percentage point increase – and rising to 92% of female shoppers. Meanwhile, 72% of UK shoppers now seek out the cheapest prices on the grocery items they buy.
With Kantar’s latest figures showing grocery price inflation rose again in February peaking at 17.1%, the highest level ever recorded by the analyst, it estimates a quarter of UK shoppers are struggling with the cost of groceries. A separate study by thinktank, Resolution Foundation, suggests wage stagnation for UK workers is exacerbating the cost-of-living squeeze further, suggesting UK consumers are £11,000 worse-off in terms of real-term wages compared to 15 years ago.
Pricer’s poll showed that this inflationary pressure on consumers’ disposable incomes was prompting six in ten (61%) UK shoppers to switch some of their grocery shop from their traditional supermarket brands to discounters, such as Aldi or Lidl, while 56% said they had swapped their entire shop to discounters.
Evidence of consumers switching to discounter retail formats saw Aldi overtake Morrisons as the UK’s fourth largest supermarket in September 2022, prompting the traditional ‘big four’ to slash prices in a bid to lure customers back. Earlier in March, Morrisons cut prices for a third time this year as it fought back against ‘Discounter Switching’, while in February Sainsbury’s launched its cut-price £2 fruit and vegetable boxes, offering surplus fruit and veg at lower price points in response to the cost-of-living pressures on its customers.
90% of shoppers in Pricer’s poll had chosen to switch to discounter supermarkets due to cheaper prices available at the likes of Aldi and Lidl, however 19% cited more choice of own-brand and value ranges being available at these stores, while 17% felt the products on offer were of better quality.
Switch from branded goods to supermarket own label
Of those sticking with their supermarket brand, loyalty was also being tested by soaring food prices. Over two-thirds (68%) say they have switched from branded goods to supermarket own label to save on food costs – up from 49% in 2021, a +19 percentage point increase – rising to 75% of Millennials. 61% have swapped their usual branded goods for branded value lines, while 68% are sticking to supermarket own label, and will only trade up to branded goods if the branded items are on offer or discounted.
“Increasingly the shelf-edge is becoming the battleground where shopper loyalty is either won or lost,” said Peter Ward, Country Manager for UK & Ireland at Pricer.
“Eager to keep down the price of spiralling food bills, our research shows 83% of UK shoppers will now compare prices at the shelf-edge to keep the cost of groceries down – up +21 percentage points since 2021, before the cost-of-living crisis took hold.”
“Giving consumers access to real-time pricing and promotions information, served digitally to them at the shelf-edge, not only helps customers feel supported in their increasingly price-conscious buying missions, but can also help retailers showcase the efforts they are going to in order to keep prices low and support shoppers by offering the best prices or deals across their sales channels,” Ward concluded.
Originally published in Retail Connection on April 3rd, 2023