Will consumers stop buying higher-quality, organic and ethical foods in tighter economic conditions and show premium food up as a fad?
What do the M&S results tell us about what's happening in grocery?
The oft-repeated wisdom is that when household budgets are under as much pressure as they are right now - and likely to be for some time to come - price naturally becomes an even more powerful and universal influence on consumer behaviour. Media coverage of the results featured hitherto loyal M&S food shoppers deserting to hard discounters.
Now, M&S has always been a limited-range, premium food retailer whose brand strength was - and still is - outstanding quality and innovation. The underlying issue for all retailers with a significant share of the premium market, however, is the extent to which the downturn will weaken what has hitherto been the strongest growth category in the industry.
Is altruism dependent on the feel-good factor? Optimists point to the decade-long growth of the "values in food" tendency as an influence on consumers and assert that it's here to stay. An IGD survey quoted in these pages last month found that four out of five consumers claim to be "interested" in at least one aspect of ethical shopping. But I wonder just how far this interest will translate into hard sales when those same consumers are strapped for cash. We are told, for example, that organic box scheme sales are down by 10%-20% on last year. Is this the shape of things to come in the organic market generally?
Organic sales may have been growing faster than the grocery market in the 12 months to March but the downturn had only just got going towards the end of this period. Cost inflation is generally more severe in organic than non-organic food production and this will inevitably widen the retail price gap between the two. Enthusiasts will no doubt stay loyal but they comprise barely the third of all consumers who buy organic, the rest being occasional buyers. Re-purchase rates are particularly poor, reflecting disillusionment with some aspect of the product.
Despite all the hype, organic represents barely 2.5% of the grocery market. Fairtrade food's market share is barely 1%, while the lack of a standard definition of "local" food makes it impossible to measure its relative significance.
Why is so much media attention being devoted to organic, fairtrade and local - probably no more than 5% of the total market? Maybe it's the attraction of a potential "rise and fall" story. If so, it could be a good read. n
Kevin Hawkins is an independent retail consultant.
What do the M&S results tell us about what's happening in grocery?
The oft-repeated wisdom is that when household budgets are under as much pressure as they are right now - and likely to be for some time to come - price naturally becomes an even more powerful and universal influence on consumer behaviour. Media coverage of the results featured hitherto loyal M&S food shoppers deserting to hard discounters.
Now, M&S has always been a limited-range, premium food retailer whose brand strength was - and still is - outstanding quality and innovation. The underlying issue for all retailers with a significant share of the premium market, however, is the extent to which the downturn will weaken what has hitherto been the strongest growth category in the industry.
Is altruism dependent on the feel-good factor? Optimists point to the decade-long growth of the "values in food" tendency as an influence on consumers and assert that it's here to stay. An IGD survey quoted in these pages last month found that four out of five consumers claim to be "interested" in at least one aspect of ethical shopping. But I wonder just how far this interest will translate into hard sales when those same consumers are strapped for cash. We are told, for example, that organic box scheme sales are down by 10%-20% on last year. Is this the shape of things to come in the organic market generally?
Organic sales may have been growing faster than the grocery market in the 12 months to March but the downturn had only just got going towards the end of this period. Cost inflation is generally more severe in organic than non-organic food production and this will inevitably widen the retail price gap between the two. Enthusiasts will no doubt stay loyal but they comprise barely the third of all consumers who buy organic, the rest being occasional buyers. Re-purchase rates are particularly poor, reflecting disillusionment with some aspect of the product.
Despite all the hype, organic represents barely 2.5% of the grocery market. Fairtrade food's market share is barely 1%, while the lack of a standard definition of "local" food makes it impossible to measure its relative significance.
Why is so much media attention being devoted to organic, fairtrade and local - probably no more than 5% of the total market? Maybe it's the attraction of a potential "rise and fall" story. If so, it could be a good read. n
Kevin Hawkins is an independent retail consultant.
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