What a year 2008 has proved to be. This time last year I said that it would become more important than ever for manufacturers and retailers to offer real value to the shopper in 2008. But I could not have predicted just how true those words would be.

We all know that 2008 has seen unprecedented economic turmoil. Shoppers have suffered. Earlier in the year it was all about inflation. Food inflation. Fuel inflation. Increasing bills. Increasing interest rates. Then came the fall. Fall in house values, the security underpinning our debt-ridden country. The fall in confidence - Nielsen's Consumer Confidence index plummeted 20 points in the year to October. And, of course, the fall of our financial system.

But throughout this turmoil, and relative to other industries, the grocery sector has held its own and adapted well. It has probably adapted faster and smarter than any other industry, in fact. Food inflation peaked at 10% in August and while consumers struggled to keep on top of household budgets, supermarkets looked at ways to provide shoppers with real value and affordable shopping experiences, as the muted performance of brands in several categories in The Grocer/Nielsen Top Products Survey 2008 shows.

When we surveyed shoppers in autumn, 50% said they were looking to save money on grocery shopping as other household bills increased, with 46% saying they were trying to buy more products on promotion. Indeed, promotions have run at record levels all year, with retailers switching emphasis towards price-cut offers. By October, 44% of goods on offer were price cuts.

Discounts of another nature have also been big news in 2008, as the likes of Aldi and Netto have come into their own. By November sales in discounters had increased 16% year-on-year for the whole year and 29% for the quarter. Some 40% of household shoppers visited a discounter in the three months to November and collectively they now hold over 6% market share.

Looking ahead to 2009, I anticipate that the discounters will have much more potential for growth as shopper interest is certainly there, but this may be limited by how fast they are willing to open up new stores in this global downturn. Increasing space given over to higher-margin private label will be a strategy some retailers will look to take, especially in light of the success of the discounters, so pressure on suppliers of branded goods will be ever more intense.

Promotions will continue to be a major theme for all retailers, and manufacturers should plan to set more budgets aside for in-store activity. But the challenge will be to get the balance right between offering good value and avoiding any de-valuation of brand equity. In that respect, it will be necessary to maintain brand marketing in conjunction with in-store promotions.

Research shows those companies that continued to invest both in sales and marketing efforts during the recession in the 1980s grew 275% in the first five years compared to 19% for those that didn't. So while cutting budgets in 2009 may seem tempting, the long-term benefits that continued investment during a downturn can reap should not be overlooked. n

Justin Sargent is executive commercial director UK of Nielsen

View The Grocer's definitive Top Products 2008 survey