The UK is currently facing a cost of living crisis, which is set to worsen as the year goes on, as consumers tighten their belts and look for ways to reduce spending with a potential recession looming.
Recent research by Kantar has found that grocery price inflation has hit 11.6% over the past four weeks, the highest level since they started tracking the data back in 2008. The UK has now reached a new peak in grocery price inflation, meaning that the average annual shop is set to rise by a staggering £533, or £10.25 every week, if consumers buy the same products as they did last year.
As a result of tighter budgets, shoppers are becoming more cost-conscious, swapping their usual brands for own-label substitutes to keep their weekly spend down. Kantar has found that own-label ranges are at a record high, with sales rising by 7.3% and holding 51.6% of the market compared with branded products, the biggest share they’ve ever recorded.
To make their money stretch further, shoppers are on the hunt for budget-friendly meal inspiration using own-label products that don’t compromise on flavour. In fact, social media platform Pinterest have reported that they’ve seen a 320% increase in searches for ‘budget meals’ over the past year, as well as a rise in searches for ‘cheap dinners for a family’ and ‘cheap healthy meals’.
What does this mean for retailers?
To meet this growing demand, retailers across the board have expanded their own value ranges over the past month or so, increasing promotion across the store to encourage shoppers to remain loyal during a time when they’re more likely to shop around for the best deal.
Consumers are welcoming the more cost-friendly options being made available to them, with sales of own-label value products increasing by 19.7% this month, according to the same research conducted by Kantar. They found that Asda’s Just Essentials line, which launched this Summer, is already in 33% of its customers’ baskets.
Recipes using ingredients from value ranges are being seen across social media, store magazines and on blog posts across all major retailers.
Over recent years, Marks and Spencer has tried to reposition itself with product ranges that cater to everyone – including those on a budget – with their ‘Remarksable value’ range. Their recent campaign with Michelin-star chef Tom Kerridge revolves around a cost-friendly meal planner that makes five delicious family meals that taste great and waste less, with additional ideas on what to do with any leftovers. It’s proved incredibly popular with shoppers, with the YouTube recipe video alone amassing over 1.5million views.
Tesco have also been cooking up some creative budget-friendly recipes on their site and social media channels, alongside providing inspiration for ways to reduce food waste with an entire recipe section dedicated for using up leftovers.
The retailer’s recent public fallout with Kraft Heinz over price increases – the multinational brand behind Britain’s most famous tinned food and the world’s most-famous ketchup – is indicative of Tesco’s eagerness to stay on consumers’ good side during difficult times. In an effort to prevent shoppers from swapping to another supermarket in search of better prices on everyday products such as beans, tomato soup and ketchup, the retailer has opted to heavily push the savings shoppers can make by purchasing their own-label versions – for example, their ketchup is a whopping £1.35 cheaper than Heinz.
With many looking to save as much as possible across their weekly shops, every penny counts, and so the potential success for own-label product ranges is huge.
While it’s clear making savings on the weekly shop is a key priority for many shoppers, it’s not only retailers who are feeling the impact of consumers tightening their purse strings.
What does this mean for the hospitality industry?
Customers cutting back on spending is also affecting the hospitality industry. Barclays recent Consumer Spending Report found that, ‘‘Almost three in ten (29%) Brits say they plan to spend less on social plans and days out this summer, with 67 per cent of this group cutting back on eating out at restaurants, and 55 per cent spending less at pubs, bars and nightclubs.”
However, when compared to other countries also facing economic difficulties now and in the near future, the UK is the least worried about spending money on going out to bars and restaurants, with only 21.8% of respondents reporting concern; compared to France (43.6%) and Italy (49.9%). This may be reflective of a widespread shift in appreciation for the luxury of socialising, after the pandemic restricted eating out and visiting pubs with our nearest and dearest for so long.
So while we may see a dip in visits, eating out and drinking in bars and restaurants is still set to remain a priority for Brits, perhaps just less frequently.
To drive customer visits to pubs and restaurants, deals and discounts will be paramount. Whether it be a set menu for a set price, themed nights focused around different cuisines such as a curry, pies or pizza, or discount codes sent out via email marketing, there are a whole host of tactics you can use to draw people in. Providing a variety of good value, delicious meals that don’t compromise on flavour is the key for keeping them coming back.
To explore our range of own-label offerings, whether it be sauces and soups, or pies and puddings, our team of experts are on hand to ensure your customers are satisfied with top quality products that deliver great taste. Get in touch today to learn more about how we can help with all your own-label needs.