So far this year, British shoppers have been in denial - spending more than they did in 2007, in spite of the mounting evidence that their incomes were being squeezed. Until now that is. Latest research from MINTEL shows that reality is beginning to strike and we Brits are now making dramatic changes to the way we do our food shopping.
Indeed, exclusive consumer research from MINTEL shows that in the last 12 months alone, 41% of shoppers have switched to cheaper brands and three in ten (34%) have cut down on the premium ranges, such as Tesco Finest and Sainsbury's Taste the difference, that they buy.
"It is clear that shoppers are now really feeling the pinch and beginning to trade down when out buying food," explains Richard Perks, Director of retail research at MINTEL. "During the recent years of unprecedented prosperity in Britain, we saw a very noticeable shift towards premium, upmarket food, with shoppers buying more luxurious ready meals and exotic produce. But in the space of just a few months, this trend has already started to be reversed."
Brits are also becoming a lot more price conscious. Two-thirds (66%) of us now look for the promotions and deals more often than we did a year ago, while 29% of us spend more time comparing prices in the supermarket. There has also been a rise in the popularity of the hard discounters, like Lidl and Aldi. And they are not just appealing to those who are less well off, as today 31% of adults go to discounters more often than they used to. All these changes are now having a profound effect on the food retailing market, as supermarkets are forced to take action to give shoppers what they need.
"The major battle of this recession will be the fight between the hard discounters and the market leading superstores," comments Richard Perks. "ASDA is focusing on its entry level prices and Tesco has just launched an ultra-low-priced range called 'Market Value'. With this shift they are making it very clear that they will not just lie back and watch their market share being whittled away by the likes of Lidl and Aldi," he adds.
In August, ONS figures showed that volume sales in the food retail market dropped for the first time. And while this is not good news for the supermarkets all is not lost. Many of them have for some time dedicated much more store space to clothing, interiors and electrical appliances, which will serve them well during these uncertain times.
"Value for money is the key to success in tougher times and the supermarkets are the retailers best able to offer that, whether it is for food or for clothes and electricals. Although no-one is likely to have an easy time, they will undoubtedly be the winners over the next couple of years," explains Richard Perks.