Speaking at a panel debate at the Food & Drink Expo show at the NEC in the UK last week, Asda corporate social responsibility director Paul Kelly said: “I’m pretty sceptical about putting this information on labels and whether it will really mean anything to people. Consumers spend about two seconds looking at the front of pack and if we put another label on there it will just add to the confusion. Our buyers should make these decisions for consumers.”
He added: “We said we’d create an index that would inform our buying decisions so we do look at the lifecycle of a product. Maybe that eventually finds its way to the front of pack but, if so, that’s some way down the line. We’d need to be really clear that this was adding value to consumers. Isn’t it more important that the buyer makes the right decision when he selects the product?”
Changing shopper habits
While Asda shoppers had changed their buying habits during the recession, the changes were more complex than many people thought, he said. “It might be a case of: ‘If I’m buying staples to put into something like a casserole, why pay a premium? But I will pay for a good cut of meat.’” There was also a tendency to switch between value and premium depending on how close it was to payday, he said. “Pay day weekends were strongly skewed towards Extra Special [Asda’s premium own-label range] but the mid-month focus was more on value.”
But spending habits had not changed fundamentally, he argued: “I think that the general direction of travel we saw ahead of the recession is continuing, but it was just distorted by all the panic.”
Tesco’s decision to launch a new ‘discount range’ to compete with the hard discounters was an example of this panic, he claimed. “I think there was some confusion over where it sat in relation to its value own-label range. We kept our price hierarchy consistent. “
He added: “I think that the growth of the discounters was overdone if you like because when they were quoting these really high growth figures, a lot of that was coming from new stores; it wasn’t like-for-like growth. A lot of it was also just picking up business from Kwik Save.”
Take your customers with you
When it came to ethics, customers were prepared to carry on paying a bit extra during the recession if the price premium was relatively small, but they were not consistent, he said. “We still saw growth in free range eggs, for example, but not in free range chicken [which is a lot more expensive].”
It was also important to take customers with you when embarking on ethical or environmental issues, notwithstanding that retailers still had to take some responsibility for doing the right thing, he added. “Look at what Malcolm Walker did at Iceland when he switched all his frozen veg to organic. It was far too early and he nearly brought the business to its knees.”