10 Grocery Insights for 2024

 

1. Inflation should slow down 💷   We were all affected by rising prices last year and even though inflation is slowing down, people are still worried about money.   Confidence has improved somewhat as shoppers are getting used to higher prices, but a quarter of UK households are struggling, and according to an IGD survey 67% of shoppers believe that food prices will continue to go up this year.   Even though we're spending more on groceries (spend is up 6.4%), we're actually buying less with volumes down by 3.4%. Volume declines affected 80% of product categories in 2023.   90% of us actively look for ways to save on groceries, from seeking out promotions to cutting waste and comparing prices at different stores, we're doing what it takes.     The hope is that commodity prices and therefore inflation will calm down in 2024, but there's still some uncertainty with unpredictable weather affecting raw materials and the ongoing impact of the major conflicts across the world.

2. Promotions are back 🏷️   According to The Grocer, more lines are on promotion now than we saw even pre-pandemic.   After years of focussing on every day low prices to compete with Aldi & Lidl, retailers have stepped up their promotions by focussing on member prices with their loyalty schemes.   Sainsburys have followed Tesco’s lead and now the majority of their promotions are under the ‘Nectar Price’ umbrella.   Meanwhile, Asda and Morrisons are playing catch up with confusing loyalty schemes.   So, it’s probably time to review your promotional strategy. Here are some helpful tips!

3. Innovation is key for brands to win ✨   33% of consumers shifted to private label products in early 2023, as a way to cope with financial pressures.   By April, own label products commanded over half of grocery value sales. Meanwhile branded sales suffered a 5.6% decline.   Asda added 813 new private label products, boasting a 21% year-on-year growth.   Tesco simplified their own label range, but by focusing on innovation saw a 10% value sales growth.   As inflation eases, brands are slowly regaining market share from private label. But where brands are winning, it’s driven by genuine innovation, giving shoppers a reason to spend more.

4. The retail landscape is evolving 🛍️   The big news in 2023 was of course the closure of Wilko. A store where 1 in 4 UK adults shopped, many of which were moving their spend away from the high street and towards retail parks for stores like Home Bargains and B&M.   In fact, 47% of Wilko shoppers also shopped at B&M.   Wilko had a strong over-trade in categories like Homecare and Pet, so it’s likely both supermarkets and value stores will benefit from its closure.   It’s worth remembering that shoppers aren’t avoiding the High Street altogether, but they are prioritising more specialist trips. Boots and Superdrug have both reported strong performance in 2023, but while Boots look to cut costs and close stores, Superdrug have been expanding.   Poundland are also bucking the trend, opening new stores and taking on many of the Wilko sites.

5. Beware of retailer driven price cuts ✂️   Aldi and Lidl are grabbing more customers from the big grocery stores, and the big players continue to respond with aggressive price cuts.   We’ve seen this behaviour over a number of years and it’s likely to continue.   Morrisons have already announced price cuts across 200 lines this week.   Brands must have a clear vision of their price position in our categories and ensure we are communicating value beyond price.   Make sure you have a rock-solid plan to justify your prices and align with the relevant people in your business on where there might be some wiggle room.   We should remember that the key driver of Aldi & Lidl’s growth has been the pace at which both retailers have been opening new stores. This can’t go on forever, so they will have to start focussing more of their efforts on driving loyalty.

6. Shoppers deserve an experience 🤩   In the last year, we’ve seen shoppers making a notable return to physical stores. Despite the longer-term rise of eCommerce, physical stores still dominate, constituting almost 90% of the total grocery market.  Stores saw an additional 34 million visits in the first half of 2023 vs. previous year.   This trend is particularly evident among Gen Z, with 51% expressing a preference for in-store shopping for groceries and personal care products.   But, as we’ve been returning to stores our experiences haven’t been all positive. Only 5% of Kantar Worldpanel Plus respondents say they would recommend their shopping experience in UK supermarkets, compared with 12% in 2022.   As retailers have prioritised cutting costs over giving shoppers an enjoyable experience, many have lost their way.   There are some glimmers of hope with some great examples from M&S and Booths, both of which attribute a focus on experience as the key to improved performance.

7. Shopping goes ‘Phygital’   Just because we’re back in store, it doesn’t mean we can forget about the digital world. eCommerce is still expected to grow in the long-term and plays an important role regardless of where the final purchase occurs.   Many of us talk about shopping journeys being either ‘online’ or ‘offline’. The reality is that no journey is linear. There is usually a mix of channels involved in the trigger, the decision making and the final purchase.   Another way we’re seeing digital enter the physical space is the rising popularity of digital screens in major supermarkets. In addition to creating less cardboard waste and being able to use movement to attract attention, these screens are proving themselves as another income stream to retailers.   If you’re investing in this new media, remember the content needs to add value to the shopper there and then. Whether it’s a promotion, a competition or simple information about the product. It’s your opportunity to communicate to the shopper something they actually want that will drive purchase.

8. Sustainability is a given ♻️   Sustainability is no longer a trend, it's an expectation.   While recycling remains the bare minimum, consumers demand more as they seek to cut down on food waste and challenge green claims from brands.   Food waste is a top concern for 25% of people. It’s an area where people can easily take action and it helps them save money, which is an added incentive in today’s financial climate. Food waste is a space where brands and retailers can really help shoppers save money, whilst preventing food waste.   However, consumers are growing increasingly skeptical about eco-friendly claims, with 59% believing that companies prioritize profits over genuine environmental concerns.   Find out more about what sustainability means to your shoppers in this blog post.

9. We’re eating on the go 🥪   UK dining habits are on the move as the average consumer enjoyed meals outside of the home 75 times last year, up from 67 in 2022.   A surge in "groceries for immediate consumption" is a major driver, with a year-on-year increase of +30%. This is driven by the 22.6% of Brits who are working at home less than the previous year.   The shift towards supermarkets and convenience stores for ready-to-eat options is evident, with many consumers trading up to new premium meal deal offerings.   Greggs also remain a crowd favourite at lunchtime, expanding with 150 new branches attracting 23 million new shoppers, and encouraging existing patrons to explore premium options.   Meal delivery services like Deliveroo and Uber Eats remain popular, with 24% of global consumers admitting they choose meal delivery simply because they "can't be bothered to cook”. While Millennials and Gen X use these platforms as a weekend treat, Gen Z are much more likely to use them for a mid-week meal.   Is your brand making the most of food-to-go possibilities?

10. We’re trying to be healthier 🍎   In the pursuit of healthier lifestyles, 70% of UK consumers are steering clear of ultra-processed foods. The desire for less processed alternatives is clear, with a quarter of consumers willing to invest more in products with health claims, according to Mintel's 2023 Global Food & Drink Trends.   Surprisingly, the HFSS regulations have not shaken up the industry as expected. Brands opted for new product development (NPD) over reformulating existing products. The sugar confectionery category has seen 13.4% value growth (volume is down 2.7%) thanks to HFSS-friendly innovations like Rowntree's new gummies.   Strategic placement of compliant products at the front of stores has somewhat cushioned the blow from non-compliant product removal.   However, indulgent categories such as cookies, cakes, and ice cream took a hit.   While the focus on healthier choices is evident, it doesn't mean you have to abandon indulgence. The standout NPD in the cereal category was the Kit Kat cereal, defying HFSS guidelines but tapping into a desire for a guilty pleasure from a familiar brand.   What’s in your innovation plan this year?

So what does all of this mean for 2024?   It's likely shoppers will continue to look for ways to save money, whether that's cutting back, switching retailers or switching to cheaper products.   The best thing we can do is to stay close to our consumers, and understand how they are feeling and what we can do to help.   As always, get in touch if there is anything we can do to support you or your business this year.   Stay safe, well and positive!   Ella