UK shoppers are increasingly seeking value amidst rising costs, especially in convenience stores, where prices have been notably higher than supermarkets.
- Tesco has announced a significant reduction in product prices at its Express stores by introducing own-brand alternatives, responding to customer demands for affordable options.
- Morrisons has similarly expanded its Savers budget line in more than 500 convenience stores, acknowledging high demand from customers.
- The economic strain and lack of budget lines in smaller stores have raised questions about why supermarkets delayed such measures.
- The competitive retail environment and political pressures are pushing more retailers to consider price adjustments in their convenience offerings.
In the face of inflation and a persistent cost-of-living crisis, shoppers in the UK continue to seek value from their local shops and supermarkets. Studies indicate that consumers shopping at convenience stores paid over £800 more annually than those shopping at larger supermarkets. Despite this, many convenience stores have not offered budget grocery lines, leaving value-seeking customers with limited options.
Recently, Tesco announced a major overhaul in its Express stores, replacing 50 everyday items with cheaper alternatives, primarily from its own-brand range. The move reportedly aims to offer great value without compromising quality, thereby reinforcing Tesco’s reputation as a cost-effective convenience store chain. This change stems from shopping data showing an increase in customers opting for own-brand products to save money.
Similarly, Morrisons has introduced its Savers budget range in over 500 convenience stores, including essential items like eggs, ham, and butter. Morrisons attributes this decision to consumer demand, particularly from areas lacking easy supermarket access. Yet, financial constraints have slowed such initiatives. As Morrisons CEO David Potts explained, convenience stores struggle to profit from entry-level products due to higher operating costs.
There is skepticism regarding whether other grocers will adopt similar strategies, given the economic hurdles. According to Dr. Clive Black from Shore Capital, servicing convenience outlets comes with higher costs, which has traditionally led to slightly higher prices compared to larger stores. Consequently, introducing value ranges could impact sales values and gross margins.
However, political pressure and consumer advocacy continue to drive change. Prominent voices like Which? argue for more budget lines to be available in convenience stores to support low-income families. There’s an increasing call for retailers to adjust prices, especially as consumer trust in supermarkets wanes.
Despite Tesco and Morrisons’ moves being praised as positive steps, consumer advocates argue that more can be done. Examples provided by Tesco, such as swapping branded pasta for its own-brand version, still fall short of the lowest-priced options available, highlighting the scope for further improvements.
The evolving landscape of convenience retail signifies a growing trend toward more affordable options, urged by economic imperatives and consumer demand.
