Food Buying Habits - How, When, and Why Did It All Change?

Food shopping habits have changed. Consumers are changing where they shop, how they shop, and what they buy.

Morrisons, home of low prices, and Waitrose at the premium end of the scale, both published half year results a couple of days ago. Morrisons grew like for like sales by 7.6%, (like for like meaning sales in stores open at least a year), and profits by 19%. Waitrose grew sales by 2.5%, a third of the rate of Morrisons, were forced to cut some prices to compete and hold market share, and saw profits fall by 8%. ALDI, viewed as having the cheapest prices of the lot, is now said to be growing sales at about 30% versus last year. A confident statement from ASDA a few weeks ago indicated that they are doing just fine because they offer really low prices. And Sainsbury and the once the once invulnerable Tesco are losing out.

Consumers are changing what they buy. We know that organic sales are struggling, reportedly down 20% in August versus last year, that meat consumption is down 5% according to the latest figures published on the British Pig Executive website, and DairyCo says that milk consumption is down. Consumers are also buying more products in retailer's Value ranges. Morrisons showed a chart at their results presentation illustrating that across the whole of the grocery trade Value ranges were growing at about 8% in the spring, but have now rocketed to a growth of nearly 30%. By contrast Premium ranges growth has fallen from a high of 15% in March 08 to around 3% in August.

Other startling changes are happening. Sainsbury tell us that between July and August sales of tupperware containers have grown by 36%, and sandwich bags by 35%, as more people take sandwiches to work instead of buying ready made.

All in all, it seems that beleaguered Brits are leaving no stone unturned in an effort to spend less. The interesting thing though, is that although the credit crunch started almost a year ago with the Northern Rock wobble, the big changes in what and where people buy only started in the spring. Going back to Waitrose as an example, they were sailing along quite nicely until early summer.

Why the drop since then? Because that's when consumer confidence started to plummet,worn away by headlines about food price inflation, spikes in oil prices, mortgage worries, and warnings of rising energy bills Another chart from Morrisons shows that in March, consumers confidence levels were down by 18%, in August they were down by 40%. Or to put it another way, nearly half the country thinks things are going to get worse, much worse. If they are that worried, it's no wonder people are changing behaviour, battening down the hatches, and bracing themselves for what might be around the next corner.

What is clear though, is that doom mongers who say they always knew that all people want is cheap food are wrong. Despite the belt tightening, Premium sales are still growing albeit at a slower rate than previously. It does not look either as if shoppers are ditching ethical principles altogether. Waitrose says that consumers are still supporting welfare friendly food but choosing free range rather than organic to save some money. ASDA says its sales of organic produce have grown by 25%, and Morrisons reported that their sales of both Fair Trade and organic sales are growing.

As ever, it does seem as if those who offer good quality combined with good value (which is not the same thing as price) will ride out the storm, ready for an upturn in confidence.