Shopper squeeze: are they turning to private label?

As UK inflation reached its highest level in 40 years, shoppers’ concerns about the economic outlook and how this will impact on them is increasing. Off the back of these growing worries, a question we have been receiving a lot recently is around, how will this impact on their perception and purchasing of private label products?

Given this interest I thought it useful to highlight three points from a recently published report on ShoppperVista, Shopper squeeze - are they turning to own label?, which looks at this question, amongst others.

1. Increase in shoppers switching to cheaper alternatives

Perhaps unsurprising given the backdrop and high levels of coverage, but to set the context, our latest ShopperVista data shows 91% of shoppers expect food and groceries to get more expensive in the year ahead, with 50% believing food prices will get much more expensive. As shoppers battle rising food and energy costs, we have seen them employ a range of mechanics to save money.

There has been an +11%pt year-on-year increase in the proportion of shoppers looking to switch to a cheaper alternative, such as a value range of private label, with double the amount opting for a lower quality product, such as a cheaper cut of meat.

2. Switching to private label is one savvy tactic being adopted

Shoppers are using a range of tactics to save money in-store with nearly nine in 10 (88%) applying a savvy shopping tactic, the same level as January. While, buying products on special offer is the top strategy adopted by one in two shoppers, almost a third have switched from a well-known brand to a private label alternative and just over a fifth have opted for a value or standard own label rather than a premium version.

Some of the increase in the buying of private label products will be being driven by shoppers switching to discounters. In the latest release from Kantar both Aldi and Lidl outperformed the market, gaining share in the 12 week period to 12 June 2022 versus the same period in 2021. Our own channel forecasts for the UK market suggest this outperformance will continue, with discount set to be the fastest growing channel to 2027. This could support private label’s long-term growth.

3. Private label fresh products are perceived as good value as branded

In our Category Benchmark report series, we explored the place for private label and amongst the 82 sub-categories, fresh private label categories were seen to be offering as good value as branded products, whilst also delivering on quality and trust. Other categories where private label was positively perceived as offering value were food-to-go, food cupboard staples and baked goods. In the ShopperVista Trade-up and down report, a quarter of shoppers had switched to private label alternatives in fresh categories to save money.

Looking for more on this topic?

You can read the whole report on Shopper squeeze - are they turning to own label?. If you are a Retail Analysis subscriber looking for how showcasing value is a current focus of US retailers, alongside nine others, then read our presentation on In-store in the US: a snapshot of current priorities.