Driving less, turning down the thermostat, and cutting back on luxuries —the cost of living crisis is prompting us to dramatically change our consumer behaviour.
That’s because households across the UK are feeling the squeeze like never before. Inflation is at scary high levels. And the cost of almost everything is increasing.
Food and drink are no exception. The price of food and drink products in the UK rose by 14.6% in 2022 up to September — the highest annual price rise since 1980.
And research from the Food Standards Agency (FSA) shows that 76% of UK consumers are significantly concerned about future food prices, while one in six people in the country are now using a food bank.
Reading these stats, it’s little wonder that customers are changing their habits when it comes to food and drink purchases.
How customer habits are changing during the cost of living crisis
Customers are changing their shopping habits in various ways, all built around the need to make household income go that little bit further.
Aldi recently overtook Morrisons to become one of the UK’s Big Four supermarket chains, changing a line-up that has stayed pretty much the same for the past two decades.
ONS research shows that 36% of consumers who reported that their cost of living had gone up were choosing to shop around for lower prices as a result.
In response to the cost of living crisis, consumers are trying to make their money go further by shopping at cheaper supermarkets, like Aldi and LIDL.
If people are having to scale back their food consumption as a whole, it makes sense that many consumers are reducing the number of non-essential treat items they place in their trolleys.
According to The Grocer, consumers are spending less cash on indulgent food and drink products. So that means alcohol, takeaway and meal kits, and snack foods they can’t use in meal preparation are being left on the shelf.
Reducing food consumption
According to a YouGov survey, 32% of Britons have reduced the amount they spend on eating out, and 28% have reduced the number of takeaways they order. These cutbacks suggest a renewed trend for eating in, similar to we saw during the COVID-19 lockdowns.
But the picture is a lot more complicated than that as proven by a worrying ONS survey. This survey revealed that some people are cutting back on essential food items, not just luxuries. More than a third of people whose cost of living went up have cut back spending on food and drink staples.
Buying on-sale items
According to Attest’s Food and Beverage Report 2022, eight in ten consumers are buying food that has been reduced in price because of an early expiry date. More and more of us are looking for discounts — and will sacrifice brand loyalty and product freshness to bag them.
Energy-conscious food purchases
We’re dealing with rising prices across the board. Energy costs are another huge concern for UK consumers. According to ONS, 79% of Britons say that they’re feeling the pinch because of rising gas and electricity prices. To use less energy, consumers are shopping for items that can be cooked quickly — or used to batch-cook meals.
In response to a recent BBC Good Food survey:
- 23% of people said that they’re using the oven and hob less
- 21% said they’re using the microwave more
- 19% said they are choosing quicker-to-cook ingredients and speedy recipes to save energy
Purchasing less fresh produce
The cost of living crisis is changing customer habits around fresh produce too. Around 13% of customers are buying fewer fresh fruit and vegetables.
Meanwhile, Tesco’s CEO reported an increase in the purchase of frozen food products. And research from NielsenIQ shows that products like dried and tinned food have also increased in popularity.
Fresh produce comes at a price premium — and it’s more likely to go bad before you get around to eating it. So it makes sense that consumers are opting for cheaper, longer-life food products.
Sustainability is taking a back seat
Customers are working hard to minimise food waste. Sixty-four per cent of us are trying to use all the food we buy. But it’s cost driving this change rather than concern for the environment.
People still care about sustainability, but affordability is currently a top priority. We’ve seen a 27.1% decrease in purchases from environmentally friendly food and drink brands.
When price is paramount, brand loyalty holds a lot less sway. Fifty per cent of consumers have said that they are switching branded products for supermarket own-label alternatives to save money.
Brand switching is more common during the cost of living crisis, but its extent seems to depend on the type of grocery product in question.
According to Attest:
- 39.3% of consumers say that they have switched crisp or snack brands
- 37.1% have switched cereal brands
- 35.2% have switched bread brands
But only 12.7% have switched to a cheaper beer or spirit brand. And only 14.1% chose a cheaper brand of pet food.
Heritage brands — like Heinz, Coca-Cola, and Cadburys — were also more likely to retain consumer loyalty.
How should brands respond to changing customer habits?
The cost of living crisis is causing a lot of uncertainty for UK consumers — and for the food and drink brands that serve them.
People are shopping smarter and shopping less, price is a top priority, and customers are less brand loyal. And they’re more likely to buy products that will last for a long time.
Things aren’t exactly looking rosy.
But understanding customers’ current mindset and priorities will help you plan your product offering, pricing, packaging, and messaging more effectively.
What else can you do to help your business weather the cost of living crisis? You can work to improve operations and make savings yourself.
You can avoid unnecessary stock wastage, tighten your processes, and save money by improving your inventory management and making it more streamlined and efficient.
Cloud-based inventory management software from Workhorse can help you to do just that. Book a demo or start a free trial today to see how we can help.