As inflation eases, grocery shopping habits are evolving, with notable shifts towards premium items.
- Supermarket leaders anticipate a positive Christmas period, attributing consumer confidence to reduced inflation.
- Consumers are increasingly opting for premium own-brand products, marking a departure from previous budget constraints.
- Upmarket retailers are experiencing growth, while value-focused chains maintain strong market positions.
- Retailers adapt to changing consumer preferences, balancing premium and value offerings in response to market trends.
In recent months, as inflationary pressures have subsided, consumer behaviour in grocery shopping has exhibited significant changes. Supermarket leaders are optimistic about the upcoming Christmas season, expecting increased spending due to the easing of inflation. This anticipation is driven by the visible shift in consumer spending patterns, where premium products have gained traction among shoppers.
During the past year, a substantial portion of consumers has transitioned towards purchasing premium own-brand items. A statement from Simon Roberts, a senior figure at a leading supermarket, highlights that nearly two out of three major purchases now include premium own-brand products. Supporting this trend, data from Kantar indicates a notable 16% increase in premium own-label sales year-on-year, while sales of value own-label products have declined by 10%. This shift contrasts sharply with 2021, when consumers gravitated towards more affordable options amid rising food prices.
Despite the growth in premium items, discount retailers like Lidl have maintained strong market positions. NIQ data underscores this by revealing Ocado as the fastest-growing retailer, with M&S and Waitrose also experiencing significant growth. The increase in market share for these retailers suggests a distinct bifurcation in consumer preferences, with a portion of the market still prioritising value in their purchasing decisions.
Examining the product landscape, there is notable growth in the premium own-label category. Insights from key industry figures, such as Aldi UK CEO Giles Hurley, reveal that consumers are choosing premium options like Wagyu steak and artisanal cheeses more frequently as economic pressures ease. Major retailers like Asda and Waitrose have responded by expanding their premium offerings, further capitalising on this trend. According to retail analysis, the division between brand-name and own-label products has narrowed, highlighting a shift towards a balanced consideration between cost and quality.
However, an analysis of purchasing volumes indicates a slight decline, with the Office for National Statistics reporting a 0.7% drop in food store volumes for October. This pattern suggests a possible increase in dining out activities, as noted by food retail adviser Katharine Shipley. Retailers are responding with enhanced food-to-go offerings, exemplified by recent product line expansions in major chains.
With easing inflation, retailers adeptly balancing premium and value offerings are poised to benefit from evolving consumer behaviours.
