Impacts of shoppers’ finances this Christmas
Starcom MediaVest’s head of thought leadership, Steve Smith, examines which supermarkets will be impacted the most as consumers spend less.
We know that many consumers are under financial pressure. The Evening Standard reported on Wednesday that whilst wage growth remains at 1.8%, the Consumer Price Index stands higher, at 2.7%. It is therefore unsurprising that YouGov estimates that households’ Christmas expenditure on food and drink will be down a considerable 8%.
The question is, which supermarkets will be impacted most?
To answer this, we used our proprietary research planning application spaceID. It shows that a significant number of supermarket shoppers have values that centre around responsibility. In an economic downturn, these shoppers are most likely to keep within their means and therefore be careful about their Christmas spending this year.
Waitrose shoppers are most likely to have responsibility centred values (34% of Waitrose shoppers), and ASDA shoppers are least likely (28%).
Proportions of all supermarkets’ customers whose values centre on responsibility
Looking at shoppers’ values alone isn’t sufficient to understand any reductions in expenditure this Christmas. To understand this, we then looked at the percentages of household income that responsibility centred shoppers spend on food. The higher the percentage, the tighter the wallets this year and the more careful they will be.
Among responsibility centred shoppers, we see that Morrisons’ shoppers spend the highest proportion of their household income on food (12.8%), whilst Waitrose shoppers spend the lowest proportion (9.3%).
Finally, we created a ranking based upon the combination of (a) exposure to responsibility centred shoppers, and (b) responsibility shoppers who spend different levels of household income on food. From this ranking we uncovered which supermarkets are likely to be most impacted by the financial positions of shoppers’ this Christmas.
Our ranking shows that Morrisons and Tesco are likely to be impacted the most across the big five supermarkets. Although Waitrose customers are most likely to have responsibility mindsets, they are under less financial pressure, meaning impacts upon Waitrose will be less than for most of the other supermarkets.
What this means for supermarkets
1. Although Tesco and Morrisons are likely to be impacted the most this Christmas and into the new year, they are likely to draw responsibility centred shoppers from Waitrose and Sainsbury’s, who account for around a third of all their shoppers.
2. Although Waitrose and Sainsbury’s are likely to be impacted the least, they need to protect their responsibility centred shoppers from poaching by Tesco and Morrisons.
3. Responsibility centred shoppers at all the supermarkets are likely to make supermarket own-label purchases a greater share of their baskets this Christmas and beyond. These supermarkets should promote own label in their marcomms, whilst also stressing a combination of quality and value for money.