Consumers are now allowing themselves to buy more premium products and small treats, according to new shopper data from Kantar.
Sales of premium own-label products at Aldi were up 16% year-on-year and other supermarkets also announced growth in sales of more premium products, including a 12.5% uplift for Tesco’s Finest range.
The recent trend indicates a part-reversal of consumer shopping habits compared to when high inflation first hit the UK in early 2022. At the time, analysts noted that Brits were ‘trading down’ their shopping habits, switching to more discount stores and own-label value products.
Despite this, the cost-of-living crisis is not yet over as UK inflation remains above the Bank of England’s target at 2.2% but the supermarket category remains a beacon of hope.
The food and drinks category can be viewed as a barometer measuring the nation’s financial outlook and, with food prices starting to fall, some are beginning to feel optimistic.
Such optimism is evident in our latest State of the Nation report, with 35% of Brits feeling happier than they did a year ago (a 3%pt rise since May). Attitudes towards personal income also showed improvement, with a 4%pt decline in those feeling less comfortable about their financial situation.
With the new government in place, attitudes towards Britain’s institutions also showed significant improvement – although overall opinions of financial institutions and the Government remain negative.
With consumers increasingly willing to treat themselves to things that make them feel good, brands have an opportunity to convince shoppers of the merits of ‘trading up’ to their products.
However, these trends should be treated with caution. As food price increases become less frequent, consumers remain vigilant about inflation and shrinkflation in their regular baskets – and may be turned off by brands they perceive as taking advantage of their cash.
Furthermore, while premium own-label ranges appear to be thriving, a large contingent of the UK relies on value ranges to get by, and recent moves by retailers to restrict the availability of budget products risk leaving these shoppers behind. As Winter approaches, retailers must offer a balanced product range that caters to all types of shoppers’ needs – targeting them with savings where they are needed most.
If the food and drink category is to be a bellwether, consumer confidence is finally returning to the UK after two-and-a-half difficult years of the cost-of-living crisis. However, as recent experience suggests, such confidence is highly volatile. Now, more than ever, it is critical for brands to understand the full spectrum of needs and budgets of their customers.
