How This Credit Crunch is Hitting Shopping Baskets

By Donald McFetridge

Gone are the care-free days of yore when middle-class shoppers constantly and consistently treated themselves to the finer things in life.

Previously they thought little or nothing of spending their income on multiple holidays, fine dining, superior wines and expensive, premium-priced supermarket products and merchandise.

These days, however, it’s pate, not foie gras. Middle-Class (MC) consumers are starting to tighten their belts along with those in the lower socio-economic groupings in society.

In short, the credit crunch has started to impact to a greater extent than ever before on those in the higher income brackets: the ABC1s are being hit every bit as hard as the C2DEs!

Even John Lewis – that paragon of retailing and hopeful future tenant on the Northern Irish retail landscape – have noticed, and reported, that the shopping behaviour of MC consumers is changing beyond all recognition.

Cash-strapped consumers are becoming much more frugal in an age where every penny counts; they are comparing prices in-store and online and, above all, they are shopping around for the best deals possible before parting with their hard-earned cash.

Morrisons (according to recent press reports) appear to be one of the few winners in the daily battle for the mind space and shelf space of MC consumers; they claim that they have poached at least half a million shoppers from their rivals during the past year.

Their competitors must be kicking themselves if this is truly the case as it has also been variously reported that Lidl is also stealing a march on the Big Four.

Times aren’t looking nearly as good for the principal supermarket operators as they did in times past – even during the past twelve months.

Interestingly, hard pressed consumers are starting to make their own sandwiches before they leave for work in the morning instead of purchasing top-dollar sandwiches from their favourite company or supermarket.

Robust research published recently has revealed that sales of Tupperware (and other) lunchboxes at Sainsbury’s nationally are up a staggering 40% year on year.

Similarly, sandwich bag sales have increased by approximately 35%, while foil wrapping is 27% ahead of sales figures this time last year and Thermos flask sales have almost doubled in the past twelve months. Things are changing and changing fast!

Ostensibly, all is well for middle-class consumers – or is it?

The foregoing statistics would seem to suggest otherwise. It appears that the credit crunch is now affecting the more affluent families and professionally-employed consumers instead of just those on lower incomes.

MC Consumers are becoming much more careful about their spending and they ARE thinking twice before they splash out on unnecessary luxury goods – right across the board – from spending on food and drink in supermarkets right through to department store purchases and spending in independent retail units. With Christmas already on the horizon (the Christmas crackers were in the shops on 6 September), this does not augur well for the Christmas trading figures as we approach 25 December.

A recent PriceWaterhouseCoopers survey discovered that 50% of ABC1 consumers thought they would be worse off next year (2009) compared with 29% who were polled in April this year.

In the UK, sales of organic ranges have dropped a staggering Pounds 20m from Pounds 100m in February 2008 to Pounds 80m this month. MC consumers are also known to be switching from organic to free range products in order to cut costs – another interesting trend which has been identified by the main players in the retail grocery market and one to which they are attempting to respond as rapidly as possible in order to capture and corner every aspect of this lucrative market.

Meanwhile, value lines and generic products are also growing by approximately 25% per year as compared with premium products which are growing by an almost negligible 2% – trends which are set to continue until the end of this year, into 2009 and quite possibly beyond.

Another interesting perspective is the fact that more of us are staying home and ‘cocooning’ instead of heading out to dine in restaurants.

As a direct consequence of this, spending on some supermarket premium lines has increased. For example, champagne sales are up 10% and Aberdeen Angus Beef is up 110% as more MC consumers who formerly ate out on a regular basis have decided to "trade up" their home dining experience by using premium products instead of having to fork out large sums of money for similar quality food in restaurants.

MC consumers are affected every bit as much as those in lower socio-economic groupings – a fact, surely, which will not have escaped the attention of the supermarket chiefs and one which they will be keen to tap into in order to retain, augment, refine and develop their market share as the dark, gloomy days of winter approach for cash-conscious, credit-crunch-ridden consumers in this region.

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