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Five Consumer Strategies for Controlling Spending

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As inflation continues to impact our weekly grocery spending, consumers are looking for ways to control their expenditure. It is in the grocery aisles that shoppers become most aware of the impact of inflation according to McKinsey research in Germany (McKinsey & Company, 2022). As a result, shoppers are looking for strategies to still meet their food and drink demands, while spending as little as possible. There are a number of strategies they use:

  1. buying less
  2. change retailer
  3. look for promotions
  4. buy cheaper
  5. absorb additional costs.

 

We can see all of these tactics at play in the latest Meat Shopper Insights from Q3.

 

Reducing the Repertoire

Trends that we saw in Q2 around consideration of proteins have continued (Bowles, 2022). Shoppers are relying more on meal plans and shopping lists to stick to a budget. Sticking to a budget also means they are doing smaller basket shopping but more often, so each visit sees smaller spend than last year. Particularly relevant to the meat category is a reduction in the repertoire of proteins. Right now, shoppers are sticking to what they know. This has meant consideration on all proteins, other than chicken has declined. Chicken remains the staple. While consideration of beef, and even more so for lamb, has declined in all markets. Lamb is seen as a luxury and more of a spending risk; it may not turn out perfectly or the whole family might not love it. Shoppers are not in the mood to take risks. As well as lamb, meat alternatives represent an unknown for many shoppers, so we see consideration of these also declining.

The challenge here is to inspire shoppers pre-store, so they come in with your category and a meal idea in mind. The longer-term challenge is to make your product a staple, one that is seen as an “essential luxury”.

 

Changing retailers

In the latest figures we observe a shift towards the Discounters in a number of markets across Europe. In Ireland, the penetration of Aldi and Lidl is very high, so very few Irish shoppers are discovering these giants. However, this is not the case in other European markets. Aldi has recently become the 4th largest retailer in the UK (Wood, 2022). Coming from much smaller bases, Aldi and Lidl are seeing big increases in market share, as well quality endorsement.

Interestingly, this has brought a new type of shopper to Aldi and Lidl, who have brought with them their quality demands, but a desire to pay less. They are thus more open to trading up when at the Discounters because they believe they are saving money on the total basket.

 

Reframing the Trade Down

This gets to a key point about shoppers right now. Yes, they are looking to control spending, but this doesn’t mean they are not open to trading up. It’s a question of reframing the trade down. 56% of shoppers (62% in Ireland) we interviewed in Q3 say they’re purchasing nicer foods to consume a home instead of eating out. Outside of retail, shoppers are cutting back on eating out, so many shoppers are looking to retail to replace that special occasion, like it did during the lockdowns. We know shoppers are desperate for promotions, our fourth strategy, so there is a big opportunity here for product bundles to deliver a joyful at home experience with quality product that replaces their restaurant trip.

As already referred to, shoppers are reducing their repertoire and relying more on chicken. There is a large amount who want to buy cheaper. However, there is evidence that shoppers are moving towards more premium chicken products. As they trade down to chicken, some shoppers believe they can afford to spend a little more on the chicken they do buy, so quality credentials remain very relevant to shoppers. There’s something similar going on within beef; consideration and purchase of steak is going down across markets, with purchase of mince and burgers up in a number of markets. However, we see a growing interest in better quality burger and mince. If we look closer at the steak category, we see it’s the purchase of sirloin that is down, but purchase incidence of fillet steak among beef buyers remains stable. The special occasion or weekend fillet remains an “essential luxury” for many, while the more affordable steak cuts are easier to drop. Shoppers have to make hundreds of trade-offs every week, and some trading down means they can trade up elsewhere.

 

What will Christmas look like?

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There is a thought that it will be about cutting back and austerity. Though if you look at the Christmas ads that are coming out for retailers, it’s all about indulgence and entertainment. It’s our first “proper” Christmas season since 2019, we’ll want to entertain and go out and socialise, these will be valuable experiences and worth paying for. The final strategy is absorbing the additional costs, Kantar data suggests shoppers absorb 25% of inflationary costs. In Q4 there will be plenty of absorbing as they decide their entertaining at home occasion is worth the cost.

Keep this in mind when you’re thinking that all of your consumers are only concerned about price. Shoppers are looking for the best value, the best quality they believe they can afford. The value equation includes lots of quality attributes, balanced against price, and balanced against the other spending decisions shoppers are making. Trading down behaviours can even present an opportunity.

 

For more

https://www.bordbia.ie/industry/insights/shopper-insights/

Bord Bia surveys 500 grocery shoppers every month in 7 European markets to understand consideration, engagement and purchase levels across proteins as well as purchase drivers and barriers and future consumption trends. For more information or individual market reports get in touch with danny.bowles@bordbia.ie.

 

References

Bord Bia. 2022. Meat Shopper Insights – Q3 2022. Available online at: https://www.bordbia.ie/industry/insights/shopper-insights/

Bowles, D. 2022. How Inflation is Changing Shopper Behaviour in the Meat Aisle. Available online at: https://www.bordbia.ie/industry/news/insightful-articles/2021/how-inflation-is-changing-shopper-behaviour-in-the-meat-aisle/

McKinsey & Company. 2022. How current events are shaping German consumer behavior. Available online at: https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/survey-german-consumer-sentiment-during-the-coronavirus-crisis

Wood, Z. 2022. ‘Big four no more’: where now for UK grocers as Aldi overtakes Morrisons?. The Guardian, Sept 17, 2022. Available online at: https://www.theguardian.com/business/2022/sep/17/big-four-uk-grocers-aldi-morrisons-cost-of-living-crisis