The UK’s vote to leave the EU could lead to some to some significant changes in consumer buying behaviour in the grocery sector in the months ahead.
A consumer survey carried out by Nielsen found that 37% of respondents plan to change the supermarket where they currently buy most of their groceries from, with discounters the likely beneficiary. Meanwhile, support for local products could increase with 31% saying they plan to buy more British groceries with only 4% planning to buy less.
However, the grocery sector could see a reduction in demand with 41% of shoppers planning to change their spending habits to save money, 52% of which said they would switch to buying cheaper grocery brands.
Looking at more general consumer attitudes to Brexit, 64% of shoppers believe it will negatively impact the British economy in the short term with just 16% expecting it to have a positive impact. Meanwhile, 67% of shoppers think Brexit will mean a rise in grocery prices, whilst only 2% think they’ll go down.
Commenting on the impact on the grocery market, Sophie Jones, Nielsen’s Senior UK Shopper Research Manager, said: “Short term volatility is to be expected. We know shoppers – even since the recession – have held onto conservative spending habits. This is likely to be reinforced more heavily in the short term.”
She added: “Price-led retailers are those most likely to benefit from shoppers changing retailer or brands to save money, which includes the discounters, Aldi and Lidl. They currently hold 11.4% market share and we expect them to push even harder and, thus, we anticipate more competition between retail channels for shoppers’ spend.
“To limit any potential impact, retailers need to ensure they have the right price and promotional strategies in place to avoid people switching as well as reviewing their product ranges to ensure categories are protected in the short term.
“Underlying demand in FMCG will change slowly and the triggers to any change in spend will be an increase in food inflation or changes in disposable household income, which may occur in 2017. The current supermarket price war is expected to continue, which will mitigate any immediate upward pressure on prices this year.”
- Given the high proportion (40%+) of fruit & Veg that is imported, can home-grown produce meet the demand?
- Meanwhile, growth of the discounters and private label at the expense of brands…?