Credit crunch generates value-for-money consumers

The credit crunch has flipped consumer trends upside down, producing a new type of savvy shopper prioritising value for money, according to David Jago, trends and innovations director at Mintel GNPD.

Manufacturers of more premium end products needed to “play up” the benefits of their products over other cheaper alternatives, said Jago.

“The same is true of ethical products,” he added. “Shoppers are demanding more in terms of flavours or health benefits, if they are going to be persuaded to continue paying a premium for Fairtrade or organic food and drink.”

If the credit crunch hit hard we might see more “safe” NPD like line extensions and new varieties, said Jago. “But companies will have to keep launching something new to attract and maintain consumer interest in a more competitive marketplace.”

Grocery think-tank IGD’s latest report “Adapting to change”, found that a quarter of shoppers are spending more time shopping and 27% said that they had started to shop around.

The credit crunch had seen shoppers choosing cheaper brands and own-label products, with one in five saying that they were buying more of these products, according to IGD. Tesco was one of the first retailers to respond to this with the launch of its discounted range.

But “economising is not the same as down-trading”, said IGD chief executive Joanne Denney-Finch. “With the surge in interest in the provenance and ethics of foods since the last major downturn, it seems shoppers are scrutinising value, but not compromising their values.”

In the past six months, IGD found that 17% of shoppers said they had bought more Fairtrade products than six months ago. And 22% said that they had bought more products promising animal welfare.

So it appeared that there were two trends working together, said Sam Waterfall consultant at Healthy Marketing Team. While shoppers were putting discounted items in their basket, they were also buying value-added brands. For example, the same shopper might buy a few discounted items, to help justify paying more for a value-added product.

He continued: “It is not an advisable strategy for manufacturers to reduce their brands to a discounted range. It is better for them to extenuate the positives to persuade shoppers to choose their products over competitors.”