Supermarket price cuts have been a key focus both in the media and within the industry in recent months. So it’s timely to take a step back and explore any trends emerging among shoppers that give an indication as to how they may react to these cuts. One key trend, for example, is British grocery shoppers’ transition into a period of growing optimism.

Shopper outlook continues to improve

Source: IGD ShopperVista research

From a firmly established base of pessimism, shopper outlook has been slowly improving. The percentage of shoppers expecting to be worse off in the year ahead has declined from 42% in May 2013 to 32% today. At the same time, the percentage expecting to be better off is at a record high of 20%. Caution is, however, expected to prevail for the bulk of shoppers, with half (49%) expecting their personal economic circumstances to remain the same. Retailers’ price focus on staple products, such as Tesco’s ‘Down and staying down’ campaign, might therefore be expected to strike a chord with the British grocery shopper.
Retailers communicating that they will maintain low prices may be helping to fuel a more optimistic outlook regarding grocery inflation. This month we have seen a record high of 11% of shoppers expecting food and grocery products to be cheaper over the next 12 months. While there has also been an increase in the percentage of shoppers claiming they trust retailers and manufacturers to keep their prices to a minimum: four out of ten versus 37% for last month. These may be small indicators of the price focussed communication having a positive impact with shoppers.

Steps towards a greater emphasis on quality

Another interesting feature happening at the same time has been a shift in shopper focus from saving money to increasing interest in product quality. Although saving money remains the focus for the majority, we are seeing more shoppers saying that product quality will become an increasing focus over the next 12 months.

Source: IGD ShopperVista research

In line with most people’s interest in price and the increasing importance on quality for some, the Morrison’s ‘I’m cheaper’ campaign aims to strike that balance. Its messaging leads with the price cuts at the forefront of their communication. However, quality assurance and quality credentials underpin this main message.
This campaign highlights the challenge of delivering great value. Supermarkets must maintain a strong value perception, especially in the light of the popularity of food discounters, while also highlighting premium quality to maximise a potential shift towards more optimistic shopper outlook.
This month, 12% of shoppers claimed they will use supermarkets more in the next year versus 9% stating the same last month. An early indication that the response from the major multiples may gain traction. However, they still face a tough battle. Nearly a third (31%) of shoppers told us they will use food discounters more in the next 12 months.
As a supermarket supplier, the focus should be on identifying where the products within your portfolio sit. Are they core, staple products or family favourites? If so, does communicating a value message, enabling supermarkets to attract more custom through price-led communication, work for your brands and category?
If they are treat or premium products, a good strategy might be to target shoppers’ increasingly optimistic view through in-store activity. This tactic, often linked to events, that showcases quality products, is one area where supermarkets and manufacturers can combine to add in-store engagement and theatre. These features can then help to create a point of differentiation and attract more customers into supermarkets.

Rob Carpenter

Shopper Insight Manager, IGD