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HomeMarketingTrust in supermarkets falls to nine-year low as consumers feel ‘ripped off’

Trust in supermarkets falls to nine-year low as consumers feel ‘ripped off’

Confidence in UK supermarkets is at a nine-year low as grocery retailers and food manufacturers face accusations of profiteering and calls for more action to cut prices for consumers. during the cost of living crisis.

Research from which consumer group? found that consumer confidence in supermarkets fell to 36 in May 2023 (on a scale of -100 to 100). This is the lowest score since November 2014. The previous high confidence level was 68 points in May 2020, meaning confidence has nearly halved in about three years.

According to the study, the dizzying price increases and lack of access to cheaper alternatives, especially in convenience stores, have led consumers to feel “cheated”, causing trust reduced.

Food inflation has surged to record highs over the past year as inflation forces producers to raise prices. Inflation for food items eased slightly in April to 19.1%, but remained near a record, according to the Office for National Statistics (ONS).

During the cost of living crisis, an increase in fuel shortages was evident as prices skyrocketed. However, research from which? shows that nearly as many UK consumers are as worried about the cost of food (88%) as the price of fuel (89%).

Amid these concerns, consumers are looking to supermarkets for value for money offers. But what are the latest figures on trust from? suggested many people feel the supermarkets do not meet their expectations.

If a retailer doesn’t compete on price, it doesn’t take long for consumers to vote with their wallets and decide to switch to cheaper supermarkets.

Richard Lim, Retail Economics

Supermarkets also faced accusations of “greed” from several quarters by continuing to profit while consumers struggled with bills. Liberal Democratic Party leader Sir Ed Davey called on the Competition and Markets Authority (CMA) to investigate the sector last month.

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As commodity price inflation began to ease, there were also allegations that supermarkets were not passing on these savings to their customers.

Speaking to Marketing Week, Retail Economics chief executive Richard Lim said supermarket costs are extremely complex.

“There are so many different moving parts in the food supply chain, and it takes time for the benefits of price reductions to reach consumers,” he said.

Lim also points out that both Tesco and Sainsbury’s experienced a decline in profits in the most recent financial years. He argued that supermarkets “operate on thin margins”.

He points out that the idea that supermarkets can withhold savings or delay the implementation of discounts simply doesn’t make sense for their business model.

“If a retailer doesn’t have the ability to compete on price, it won’t take long for consumers to vote and decide to switch to cheaper supermarkets,” he said.

The CMA itself has also dismissed any prospect of a full investigation into the sector, saying that “global factors” are primarily driving the price increase and that it “has not seen evidence pointing to negative effects.” specific competition concerns in the grocery sector.”

While claims of profiteering against supermarkets can be difficult to prove, there is still a lot of discussion about what can be done to reduce prices. At the end of last month, the government was considering the idea of ​​a voluntary price ceiling on basic goods in supermarkets. At the time, Asda president Stuart Rose told Sky News this represented “an outdated idea”.

Discussions around profiteering and price caps, as well as shelf prices, appear to have damaged consumer perceptions of supermarkets, as demonstrated by the lowest 9-year confidence level found. seen by Which?.

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Rocio Concha, director of policy and advocacy at Which?, said: “While the entire food supply chain affects prices, supermarkets have the right to do more to support those in need, including making sure everyone has easy access to food. affordable, basic budget levels at a store near them, including smaller consumer stores that rely on these.”

He added: “Supermarkets must also provide transparent pricing so that people can easily figure out which products offer the best value.”

Perception of diminished value

Indeed, supermarkets’ perception of value is also on the decline, with Tesco, Sainsbury’s, Asda, Morrisons and Waitrose all said to represent less value for money than they did last year, according to data from BrandIndex by YouGov.

Morrisons showed the biggest drop, with its perception of value last year at 14.7, compared with 21.9 in the previous period. The UK’s largest supermarket, Tesco, has also seen a statistically significant drop from 26 to 22.3 over the past year. Meanwhile, Asda’s value perception score fell from 27.5 to 26.2, Sainsbury’s fell from 13 to 9.9, and Waitrose’s fell from -10.3 to -13.2.

Among the UK’s largest supermarkets, only Aldi and Lidl have improved their perception of value year over year, which is reflected in the increase in market share both have achieved. Aldi’s score has increased from 53 to 55, while Lidl has increased the perception of value from 48.8 to 50.3.

As Lim pointed out, consumer perception of price is important for boosting supermarket sales.

“We’ve seen a lot of retailers pivot their marketing proposition and messaging to place value at the heart,” he said, giving the example of extended loyalty programs. .

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Tesco has continued to expand its Club Rates initiative this year, while Sainsbury’s and Co-op have begun offering exclusive savings to members.

Research from which? shows consumer demand for an extended range of value from supermarkets, with 57% of consumers saying this will help them save on shopping.

Supermarkets have also been investing in value across their range. In April, Sainsbury’s said it had invested £560m in rebates over two years. Meanwhile, Tesco’s boss, Ken Murphy, told investors in April that the supermarket was “relentlessly focused on value”.

Perhaps unsurprisingly, given its more upscale location, Waitrose ranks lowest in perceived value among all of the UK’s largest supermarkets, according to BrandIndex. However, even as a traditional supermarket attracts more affluent consumers, the supermarket is still working to realize value.

Yesterday (June 12), it announced that it had discounted 200 of its own branded products, with at least half getting up to 10% off.

Tesco’s Murphy said the supermarket would continue to be “vigilant and strong” on prices, while Sainsbury’s Chief Executive Simon Roberts also pledged the supermarket would continue to work with the first value range and price point. in the coming months.

While commodity prices are showing signs of falling, it seems that supermarkets will need to continue their efforts through pricing and discounts to demonstrate to consumers that they can count on value.

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