The cost-of-living crisis in the UK has seen the price of everyday essentials rise to a level that is disproportionate to average household incomes. As a result, consumer behaviour has dramatically changed, particularly when it comes to grocery shopping.
With rising prices and tighter budgets, consumers are looking to get more for their money and supermarkets have a new challenge to meet their customers’ expectations and budgets.
The increasing cost of groceries is a concerning matter for consumers – the price of food and non-alcoholic drinks rose by 17.4% in the year to June 2023, and some meat and vegetables have doubled in price. This has caused leading supermarkets to invest in creative pricing strategies to remain affordable and retain customers.
For example, Sainsbury’s has invested over £560 million to keep its prices low over the past two years, whilst Morrisons has widened its Savers range by more than 10% over the past few months.
The Daily Mail also reports a decline in round pound pricing, with retailers halving the number of products sold for £1 in a year from 9% to 5% and instead, offering more value at non-traditional price points such as £1.25 and £2. This increased price point means consumers are looking to get more for their money in terms of quality and quantity.
It’s no surprise then, that according to Nielson IQ’s Homescan household panel survey, one of the most important factors for consumers when it comes to choosing their favourite supermarket is price. This is closely followed by a good overall shopping experience, with promotions and offers ranking third.
When asked to choose their favoured retailer, Tesco was the winner for the third consecutive year, found to be leading in six out of 10 categories. It was the preferred supermarket in areas including promotions/offers, convenient ways of shopping, good use of technology, varied product choice, product availability and quality food and drink – all attributes that consumers are looking for from supermarkets in the cost-of-living crisis.
On the other hand, Aldi is seen to be reacting best to the cost-of-living crisis, with 19% of respondents citing it as the best in this respect. Asda also appeared in this category, suggesting that it has made an impact with its moves on price and loyalty, despite slipping in overall shopping experience.
So with consumers prioritising price and promotions at the top of their list, can we expect to see a decline in ‘greedflation’ as supermarkets prioritise the needs of their customers over profits? And will we see even more creative pricing strategies from our favourite supermarket?
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