Inflation, Spending Patterns and Online Trends in Grocery 2017

Elevaate
Elevaate
Jul 25, 2017 · 2 min read

Inflation

The current UK market for Grocery is seeing inflation return with January 2017 seeing the first sign of rising prices following 30 consecutive periods of deflation. In the latest data released by Kantar for the 12 weeks to 18 June 2017 they showed that on 75,000 identical products that inflation stood at 3.2% for the 12-week period.

However, this does not mean all consumers are paying this as experience shows consumers manage their personal inflation by switching the products they buy or changing where they shop.

An illustration of this is that we have seen both Aldi and Lidl growth rates accelerate since January as consumers seek to defray higher prices. Kantar also reported in the data for 21 May 2017 that Private Label was seeing a growth of 6.0% whilst brands were just 0.6%.

With wage growth now below inflation consumers will see their disposable income squeezed, so brand owners at every stage of grocery will need to ensure they communicate clearly to consumers emphasising their brand values. This remains true for retailers and brand owners alike.

Spending Patterns

Recent research by IGD shows that only 15% of disposable income is spent on food and drink

Experiences are now taking a bigger share of disposable income spending, with holidays, eating out, car purchase and running costs, all taking more of consumer’s disposable income than food and grocery.

However, retailers and brands are still able to excite consumers when they offer the right proposition. As an example, the Free From Category is still seeing massive growth as consumers have spent an amazing £222m more on Free From Products year on year. This despite 75% of consumers coming into the category have no dietary intolerance. With a growth rate of 38.5% year on year if the consumer proposition is right then they will spend their hard-earned money.

Online Shopping Trends

Again, according to IGD the online channel is mainly used for main shops:

Is this a deliberate move? Or do shoppers not think about the channel?

The UK has the highest On-Line basket size in the world for FMCG, according to Kantar the average basket size at $83.40 (£64.65), which is 4.5 times the size of the UK Off-Line basket. The market is still in growth at 10% in value although the number of active users has only grown 0.1% 2015 to 2016. However, the core user grew frequency by 9.2%.

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