Brasher of Tesco and King of Sainsbury Confirm Changed Consumer Behaviour

Figures from the ONS last week indicated that shoppers are buying less food, with volume sales in February down 2.2% compared with February 2010. There were reports that this is the biggest month on month drop since records began in 1988. According to Justin King of Sainsbury the February drop came as a bit of a shock. He said “there is a new reality. There has been a quite significant step down by customers”. Whilst a cutback in January is the norm it is unusual for the purse tightening to continue into February, and what Sainsbury is seeing is shoppers deliberately buying less when doing their main shop, and topping up mid week on essentials. Mr. King speculated that this could be in an effort to avoid waste. Shoppers are doing even more cooking from scratch and shunning ready meals in an effort to reduce the “cost per calorie”. They continue to seek out good promotional deals. He added “I don’t see sentiment changing in the foreseeable future”. Richard Brasher, new boss of Tesco, speaking at the Retail Week annual conference, confirmed that behaviour was changing, and also mentioned cooking from scratch and seeking the best offers. But, he said “there is no neat sound bite to sum up what the change is”. Overall, shoppers were being more careful. They were still prepared to buy premium goods but he added that “Value for money trumps being the cheapest.” In his view, consumers are just as keen as they ever were to achieve cherished goals such as a comfortable home, or a good holiday, and that shortage of money was driving consumers to be even better informed about where they could get the best deals. Hard data tends to support what the two retailers are saying. Figures published on the BPEX website show that meat consumption is holding steady, possibly as a result of more scratch cooking. The exception is lamb which continues its downward plunge in sales (minus 11% in expenditure and 21% in volume in the last twelve weeks). Dairyco data shows milk volumes holding up, but prices are well down as retailers continue to price promote.