Own-label and Discounters Flourish in Inflation
As grocery prices soar, consumers have no option but to turn to own-label brands to save money. Impacting everyone in the UK in one way or another, the cost of living crisis has led to the rising cost of food across all retailers. To combat this sudden change many consumers have turned away from established supermarkets, opting for the much cheaper discounters instead.
Kantar revealed a 16.7% increase in the price of groceries during the first 4 weeks of January, the highest since 2008. As the head of collecting data on Price growth in retail, Kantar has been tracking this information and recently released an article detailing the changes. We’re going to delve into this article and break down the biggest changes in grocery that will affect companies and customers.
World’s most expensive weekly shop
With the current increase in prices, it will cost an extra £788 a year for an average grocery shop. As a result, this could lead to the UK spending over £12 billion on shopping; the first time this threshold has been broken. After the dip in prices last December, shoppers had high hopes that things were returning to normal, however, there are no signs of the prices waning.
Introducing the own-label
Shoppers are finding new ways to reduce the cost of their weekly shopping. Supermarkets like Asda, Tesco and Sainsburys have all introduced their own labels in an effort to compete with big brand alternatives. As the race to retain customers begins, each supermarket has begun mass producing its own versions of classic products like pasta and meat to undercut the competition. Own-brand versions can save as much as £2 per item compared to the branded alternative, which is a difference that many consumers won’t refuse. This led to a 9.3% rise in sales for own brands compared to established options.
Supermarket competition
Where you choose to shop has become such an important choice, now more than ever supermarkets are trying to steer consumers towards them over their competitors. Many shops have shifted towards everyday low pricing and reward schemes as a way to give themselves an edge over their rivals. Either through introducing a points system or price-matching their own-label range with the discounters, the rivalry between retailers has never been so high. Waitrose, Aldi and Lidl have all been the most successful, experiencing the highest growth during these times.
Dominant discounters
Aldi and Lidl were particularly well received with Aldi’s year-on-year sales increasing by 26.9% and Lidl’s sales jumping by 24.1%, increasing both of their overall market shares. After a recent customer satisfaction survey, it turns out that Aldi has the best priced and best overall value for food. In contrast, Lidl has the most availability on shelves and the easiest to access-stores. It seems that the allure of branded products has faded and people are now happy with the own-label alternatives, this poses the question of the longevity of brands.
In conclusion, the inflation of grocery prices has been massively detrimental, not only to consumers but brands as well. The introduction of own-label products has reduced the publics need for premium brands when the alternatives are much more appealing. This begs the question of whether brands will be able to make it through this difficult period when shoppers are being more financially cautious.
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