UK consumers shop for value, quality

Consumers are looking for lower prices, but are not willing to sacrifice quality

Datamonitor's research* has shown that UK consumers are among the most sceptical in the world, with 90% believing that the country is in recession, and a further 47% experiencing a worsening personal financial situation between October 2008 and April 2009. It is therefore not surprising that ‘lower prices in general' is a big influence on where UK consumers now do most of their grocery shopping. However, the primary influence was ‘the overall quality of products sold', demonstrating the ‘want-it-all' attitude of many consumers in the UK. Only 36% of respondents in the UK cited ‘habit' as being an important influence on where they shop for groceries, suggesting that store loyalty is not high.

Consumers are willing to shop around to obtain better value

A significant majority of 71% in the UK agree that they now wonder more whether they are getting value-for-money from their grocery purchases. In addition, almost one third of consumers are changing where they do their grocery shopping in a bid to save money. Other popular approaches employed by UK consumers included using coupons to obtain discounts and being more disciplined by using a shopping list and not buying any additional items.

“This provides opportunities for those industry players that can successfully find the ‘value sweet spot' whereby the product or service meets or exceeds quality expectations, but at a price that is slightly less than expected. This applies to all sectors of consumer packaged goods,” comments Daniel Bone**, Datamonitor analyst and report author.

Private labels are more widely accepted among consumers

While some brand loyalty could be seen among UK consumers, 43% agreed that they had recently given up some of their favourite grocery brands. In light of this finding, it is unsurprising that many private label brands have enjoyed success. Datamonitor research emphasized these attitudes among consumers - only 15% advised that they ‘rarely' or ‘never' bought private label products, while 39% could be classed as regular purchasers in this area.

Regular purchases of private label products in one category can allow consumers to maintain their preferred brand choices in another category, and this behaviour is common among consumers in the UK. In some categories, consumers see little difference in the quality of private label products when compared to market-leading famous brands, and this represents the challenge that some marketers will face. For example, 46% of UK respondents felt that private label food products were identical to branded equivalents, while a further 7% said that private label was superior in this field. It is likely that consumers will maintain their purchasing patterns when economic conditions improve if they are satisfied with the quality of private label goods.

Evidence of a ‘recessionary mindset' is most apparent in the home

Many UK consumers are making changes to their lives at home in order to conserve funds. Overall, 43% advised that they had made more efforts to cook from scratch and use fewer convenience foods in the past year, while a study published in The Grocer in March 2009 by management consultancy Booz & Company reported that 38% were planning to cut back on their consumption of prepared food.

In the area of personal care, the majority of consumers had not changed their consumption patterns. A total of 53% of UK consumers felt that it was important to look their best in day-to-day life and this has helped the sector to develop a degree of resistance to recessionary conditions, evidenced by 59% of consumers stating that they had not made any discernible change to their consumption patterns in this field. The most prominent action taken to save money in this field was to ensure that health and beauty products are fully used up before replacing them in order to save money, which was practiced by 16% of consumers.

The alcoholic drinks market in the UK has traditionally fared well in recessionary times and while many consumers in the UK are mindful of the amount of money they spend on alcohol, the majority had not changed their consumption behaviour in this field. The ‘affordable luxury' status of the alcoholic drinks industry has been maintained, and while some declines have been reported in the on-trade, the sector as a whole has performed reasonably well in current unfavourable conditions.

Purchases of household care products remain inherently price-driven in the UK, and this is largely true in any economic climate. “Consumers' emotional attachment (in household care) is more likely to emanate from their relative time scarcity and dislike of doing household chores. So, while UK consumers in this sector are highly conscious of price-led value, they are careful about making product choices that might make household chores more arduous than necessary,” says Daniel Bone.

Notes:

* The report: The Global Economic Crisis: The Impact on Consumer Attitudes & Behaviours in the UK written by Daniel Bone, was published in June 2009.

**Daniel Bone is lead analyst and author of the report, and Matthew Taylor, is a consumer markets analyst with Datamonitor.