British consumers are reacting to the cost of living crisis by trading down in both stores and products- switching from convenience stores to discounters and from branded to lower-priced and private label products- a report from consultants McKinsey said on Monday (16).
According to survey by McKinsey, a net 22 percent of consumers shopped more at a discounter, with a net 9 percent less at a supermarket and a net 32 percent less at a convenience store, which tend to have higher prices.
McKinsey said their survey found that 64 percent of UK consumers say they have responded to price increases by adapting their shopping behaviour in the last four to six weeks, with noticeable channel and brand shifts as they search for value for money.
McKinsey also found that a net 48 percent of consumers had traded down on household products, 40 percent had traded down on both snacks and confectionery and frozen foods, while 24 percent had traded down in bread and bakery products.
Surging prices are causing the biggest squeeze on UK household incomes since at least the 1950s and consumer confidence is at near record lows.
Britain’s consumer price inflation rate hit 7.0 percent in March and economists polled by Reuters expect it will leap to 9.1 percent, its highest since 1982, when April’s data is published on Wednesday (18).
Elsewhere, there is evidence that cash-strapped Britons are eating out less, reducing car journeys to save on petrol and cancelling subscription streaming services such as Netflix and repair warranties on domestic appliances.
Recent supermarket industry data from market researchers Kantar and Nielsen has also shown a shift to discounters Aldi and Lidl despite a major focus by Britain’s big four grocers – Tesco, Sainsbury’s, Asda and Morrisons – to keep the prices of the most commonly bought products low.
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