As inflation eases, the shift in grocery shopping habits becomes evident, with trends moving towards premium products.
- Shoppers are increasingly opting for premium own-brand products, reflecting changing consumer preferences.
- Discount retailers continue to thrive, suggesting a persistent demand for value despite easing inflation.
- The gap between brands and own-label products is narrowing, indicating a shift towards more balanced purchasing decisions.
- Dining out is becoming more popular, potentially challenging supermarkets to adapt to consumer changes.
With inflation easing from a high of 17.5% in March 2023 to just 2.3% in October, consumer behavior in grocery shopping is experiencing a shift. Shoppers, who once turned to affordable own-brand products during high inflation, are now showing interest in premium options. For instance, Sainsbury’s reports that two-thirds of large purchases include items from their premium range.
The premium own-label category is witnessing notable growth, with a 16% year-on-year increase in sales. Data from Kantar reveals this growing trend as shoppers move away from value ranges, which saw a 10% decline. Upmarket retailers have benefited, with Ocado’s sales increasing by 15.9%, and M&S observing a 12.4% growth.
Despite a trend towards premium products, discounter Lidl achieved record market share in May. This suggests a mixed consumer approach where value remains significant, even as the market adjusts to new economic realities. Aldi also notices customers trading up, opting for premium own-brand lines such as Wagyu steaks and artisan cheeses.
As inflation has lowered, the difference between purchases of branded and cheaper groceries has narrowed. While brands maintain a slight edge, the discrepancy is minimal. This demonstrates a changing landscape from last year, where own-label lines were significantly favored during heightened price sensitivity.
Dining out habits have also evolved, with more spontaneous and accessible dining experiences gaining popularity. This shift poses a potential challenge to supermarkets, pushing them to introduce more on-the-go options. Supermarket chains like M&S and Waitrose are responding by expanding their food-to-go ranges.
Future economic dynamics remain uncertain, especially with potential price hikes from increased costs like those due to raised National Insurance contributions. Despite this, there is optimism about the upcoming holiday season, with consumers possibly loosening their spending limits to enjoy festivities.
As shoppers navigate easing inflation, their evolving habits highlight both a desire for premium experiences and a need for value, creating opportunities and challenges for retailers.
