Download Eyeing up the cost of UK groceries

Eyeing up
the cost
of UK
groceries
STORE
Introduction
BeMyEye used its crowd of more than
350,000 ‘Eyes’ to source prices of 10 products
to capture the pricing discrepancies between
grocers, convenience stores, off licences and
independent supermarkets. The intention
was to uncover insights into the cheapest,
and/or most varied pricing throughout the
country across a typical UK consumer’s
shopping basket.
These changes in the market have been widely reported in the past
decade. The large scale hyper markets seen in the last two decades have
begun to retreat, replaced by smaller local convenience stores that better
cater to the modern consumer.
The financial crisis of 2008 created an ideal opportunity for supermarkets
such as Aldi and Lidl to serve customers who wanted to make their
money stretch further. This ‘savvy shopping’ trend looks certain to
continue now that consumers know they can get more for less.
Consumer behaviour will dictate the future of the grocery market. Recent
reports have demonstrated a shift away from the big weekly shop
towards “little and often” shopping habits. According to IDG, discount and
convenience, as well as online, are predicted to grow as the size of UK
baskets fall.
These changing shopping attitudes and habits are placing pressure on
retailers and brands, which strive to understand and stay one step ahead
of consumers in order to survive in a competitive landscape.
Consumers are now bombarded with more choice, not only in store
but also online. Developing and maintaining the loyalty to retailers is
becoming tougher and tougher due to convenience shopping. For brands,
this means their remit now must cover every relevant touch point.
With these increasing market pressures, it’s more important than ever for
brands to keep up with the rapid pace of change and to have a constant
view of how their products are performing across all environments.
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The Eyes were tasked with collecting unique insights on prices of a
range of different products; eggs, bread, milk, a can of Coca Cola, Kit
Kat, hummus, avocado, lager, a Pot Noodle and a tin of Baked Beans.
These products were selected based on a typical basket of an everyday
consumer, with an additional focus on some essentials required by
university students.
BeMyEye’s real-world data gathers collect insights for brands through
challenges that are set in their close vicinity. Through a map view in the
BeMyEye Smartphone App, insights are collected and supported with
photographic evidence taken by the Eyes in-app. The information can
be tracked back to the individual store level, allowing a census instead
of sample approach that supplies brands and retailers with actionable
intelligence in a fast and affordable way.
The report includes 414 total responses over four days
by the Eyes in the UK across:
»» 67 Convenience stores
»» 61 Off licences
»» 285 Grocers
About the
research
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Food prices are lower than they
have ever been; in fact grocery
prices fell 0.8% in June, marking
the deepest deflation in food for
over a year, according to the British
Retail Consortium-Nielsen Shop
Price Index.
Stocking up
on essentials
However, the price for essential
items is now comparable to
packaged foods. The average
price of bread is 68p, milk is
82p and eggs are 90p – so it’s
actually cheaper to buy a tin of
Baked Beans at an average price
of 40p than any of these staples.
In addition, the Eyes were just as
likely to find a Pot Noodle instore
as they were eggs. This would
suggest that shelf space is just as
dedicated to convenience foods as
it is fresh produce in stores today.
For a long time, supermarkets
have been able to offer cheaper
prices than convenience stores
and local independents because
of their size, allowing them to take
control of the UK’s grocery sector.
The Grocer recently reported that
the price of milk is beginning to
rise. Asda, which was the first to
slash the cost of four pints by 6p to
89p in January, pushed its back up
to 95p in May.
82p
MILK
p
90
40p
68p
With such a fierce battle for
custom however, now there is
an inevitable price war amongst
supermarkets, convenience stores
and off licences. The Eyes actually
found that for all of the basics put
together (bread, milk and eggs) the
cheapest average total price is in
off-licences at £1.46, followed
by supermarkets, then
convenience stores.
In two out of three cases, shoppers
will spend less than £2.32 on their
grocery essentials; milk, bread
and eggs. The cheapest these
items can be purchased for in a
supermarket is £1.81. Asda and
Tesco are the cheapest of the big
four supermarkets for these
basket essentials.
The most expensive loaf of bread
is found in Londis convenience
stores, specifically in Greater
London on Albert Embankment
(SE1 7TJ), Abington, Oxfordshire
on Vineyard (OX14 3PB) and in
Beaconsfield, Buckinghamshire on
Mayflower Way (HP9 1UG).
The cheapest pint of milk identified
by the Eyes is in Northern Ireland.
In Tesco in Derry at the Quayside
Shopping Centre on Strand Road
(BT48 7PX), in Asda, Gwynedd on
Market Lane (BT20 4SU) and in
Asda in Antrim on the Junction 1
Retail Park (BT41 4JG) consumers
can find the lowest prices.
The average price of bread is
68p, milk is 82p and eggs are
90p – so it’s actually cheaper to
buy a tin of Baked Beans at an
average price of 40p than any
of these staples
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7/10
Our real world data gathers reveal
that seven out of the 10 items we
researched are cheaper individually
in a supermarket compared to a
convenience store or off licence.
Convenience stores and off licences will always struggle to compete
on price. In fact, of the items we surveyed, convenience stores were
only able to offer Kit Kats and avocados at more competitive prices
than supermarkets. Pot Noodles were cheaper in off licences. Where
these stores can compete however, is by appealing to the UK’s
appetite for convenience.
Lifestyle changes mean that people are not making the time to do
a weekly shop. People have never been busier than they are now;
62% of people say that a busy work schedule and social life mean
that they don’t have hobbies. Sainsbury’s made the decision to stop
doing multi-buy offers last year because the average shopper now
goes to the supermarket twice a week to buy “what they need, when
they need it”. Buying more than you need because of a multi-buy
means that shoppers are now unnecessarily spending more than
£1,270 a year says MASA. UK consumers are moving away from bulk
buying and towards little and often shopping.
Are people
paying for
convenience?
Amazon Dash could be what the next phase of convenience looks
like. Prime customers in the UK can now order essentials from 48
brands, including Air Wick, Andrex, Ariel, Brabantia and Fairy, at the
push of a button. While the Dash Button saves time for shoppers,
each product ordered from Amazon Dash currently costs £4.99.
It seems surprising that consumers will pay £10 for a couple of
household items like coffee and toilet roll but the service has proven
popular in other markets. Since launching in the US last year, the
Dash Button programme has seen continued growth, with the
number of brands, orders and items available all increasing at a
rapid pace.
As people do smaller, more regular shops, it’s becoming clearer
that consumers are happier to pay more for the luxury of shopping
locally and conveniently.
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Prices in convenience stores
compared to supermarkets in
the same area vary hugely across
the country. For example, for
a basket of basics (milk, bread
and eggs) in Oxfordshire it is
58% more expensive than in a
supermarket in the same location.
In Buckinghamshire the gap is
even wider, with a 75% difference
between the price of the goods
in a convenience store and
supermarket. In Greater London
it’s 23% more expensive to shop
in a convenience store. However,
in Gloucestershire the difference
is only 6%, lowering the price of
convenience for the consumer.
According to The Local Shop
Report for 2016, convenience
stores have invested over £600m
in their businesses over the last
year to improve their stores.
James Lowman, chief executive of
the Association of Convenience
Stores supports this, explaining
that its members have invested
millions of pounds in refrigerators
and new equipment to cater for
shoppers’ habits.
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The type of products that
convenience stores are able
to offer more cheaply are
interesting; it never used to be
that common to find an avocado
in a convenience store. However
the Eyes reveal that a convenience
store is now the cheapest place to
buy one. In addition, off licences
offer KitKats and Pot Noodles
more cheaply than other stores.
Local shops cannot continue to
rely on tobacco, newspapers
and confectionery alone. There
is demand amongst customers
for a wider range of goods in
convenience stores, including
fresh food and quality ready
meals. Shop owners should
investigate the appetite for new
Kit Kats and avocados
were sold at a more
competative price in
convenience stores.
Pot Noodles were
cheaper in off licences
product ranges within their stores
to unlock new brand and
sales opportunities.
Eat 17 in East London, which is an
affiliate to Spar, is an interesting
example of a local store that has
expanded to provide convenient
and fresh products. It sells items
you would usually find in Spar
shops but has also branched
out to sell its own microwavable
meals, pizza and prosecco.
By keeping an eye on the latest
food trends, and stocking fresh
ingredients that are best-selling
foods, convenience stores and
off licences may be able to
open new revenue streams. By
moving away from the products
they are currently stocking and
making space for fresh produce
and convenience foods, they
can appeal to the little and often
shopper that offers a huge
growth opportunity.
Our Eyes reveal that a
convenience store is
now the cheapest place
to buy an avocado
STORE
Brands need to make sure
that because of the increased
competition between convenience
stores, independents and
supermarkets their products are
competitively priced. However,
because it’s difficult for brands to
visit and analyse their presence
across thousands of these
independent stores due to the
time and cost to collate data
from all of these locations, it’s
difficult for them to get a complete
understanding of the
market instantly.
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Spotlight on
two customer
segments
Online shopping has allowed brands to use
data to target their customers based on who
they are and recommend products based
on their behaviour across digital channels.
However, in the real world, retailers and brands
face a blind spot when it comes to identifying
their different audience segments and how
they’re purchasing in individual stores.
We looked at the shopping habits of two types of shoppers; the health
conscious shopper and the penny pinching student to understand how
brands can best engage these audiences based on price information.
1) The rise of the health conscious shopper
Earlier in the year we heard of a potential avocado shortage, sparking
concern amongst a fresh breed of health conscious millennials.
According to Morgan Stanley, nowadays, millennials care more about
food being “fresh, less processed and with fewer artificial ingredients”,
as opposed to fewer calories. Luckily for this group, the avocado
shortage didn’t appear to materialise, and we’ve continued to see the
rise of health icons, such as The Body Coach, dominate TV screens and
social media. This has ultimately changed the modern-day shopper and
their needs, fuelling the rise of the diet focused individuals.
Whilst something like an avocado may have been an occasional
purchase for a particular recipe a few years ago, items such as these
have quickly become an everyday essential for many – The Grocer
reported last year that Brits spent £142 million on the fruit!
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52%
2) University students –
a breed of their own
You are far more
likely to find an
avocado in UK
shops, than a can
of Coca Cola
The Eyes found that, nowadays,
you are far more likely to find an
avocado in UK shops, than a can of
Coca Cola. 62% of the Eyes found
an avocado in stores, as opposed
on only 52% finding a can of the
famous fizzy drink. In fact, the
only supermarkets that regularly
stock cans of Coca Cola are Tesco
and Sainsbury’s. The Eyes only
found cans in four of the 167
Morrison’s and Asda stores they
visited. Similarly, you’re also more
likely to find a pot of hummus in
shops, with our Eyes finding this
item 66% of the time.
It’s now cheaper to buy an
avocado at a convenience store,
as opposed to a supermarket. This
highlights the increased demand
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for such items as a convenient
purchase. Paired with this, the
average price for a Pot Noodle is
£1.02, whilst a pot of hummus is
£1.01 and an avocado is just 62p.
As the diets of the UK shoppers
change and people become
inherently more health conscious,
off licences can benefit from
stocking fresh food alongside
packaged goods. If completely
visible to the shopper on the shelf,
avocados are something that the
modern-day shopper is compelled
to buy.
With limited funds, but often
a full social calendar, bargainsavvy students are no strangers
to sourcing the cheapest priced
items. With research from
UNiDAYS showing that two
thirds of students spend their
time shopping, these individuals
dedicate lots of their time to
perusing shop aisles and picking
out the best offers.
With this in mind, data from the
Eyes suggests that Tesco offers
the best value out of the big
four supermarkets. Essentials
including Baked Beans and a
Pot Noodle are identified as
cheaper at Tesco than at Asda,
Sainsbury’s or Morrison’s. The
cheapest that a student can
source these essential goods for
is £2.02, whilst the average for all
three items comes in at £4.08.
The region where students can
purchase the cheapest basket of
goods is the West Midlands and
it’s most expensive in Lancashire.
While this is great news for
students at the University of
Warwick and University of
Birmingham, it’s bad news
for students of University of
Manchester and University of
Salford.
A four-pack of lager is the
product that sees the widest
variation in cost, with £7.50 being
the most expensive, found at a
Londis store on the Kings Road in
London, and 88p the cheapest at
Morrison’s.
For those extra cost-conscious
students, it is worth visiting
different types of stores to find
items at the lowest possible
cost. Supermarkets aren’t always
cheapest, with the Eyes finding
that actually, the best place to
buy a Pot Noodle is at an offlicence, as opposed to one of the
big four supermarkets, or even a
convenience store.
Brands need to make sure
that their student-friendly
goods are priced competitively.
These individuals are prone
to sniffing out discounts and
deals, so ensuring promotions
are displayed correctly and
competitively is vital.
62%
The report demonstrates the huge
differences between stores, regions and
products across the UK.
With the grocery market constantly shifting and competition
increasing across all channels, retailers and brands have to make
rapid decisions based on specific data in target markets. Those
that understand the context behind exactly how products are
performing and how their customer segments react will ultimately
win out.
Businesses need to use technology and the scale it offers to source
location-specific information in real time. The insights they uncover
will enable them to observe, audit and take control of their physical
presence; providing the intelligence to identify new revenue
streams, uphold brand integrity and make savings quickly. The
method of mobile crowdsourcing empowers businesses to “see”
thousands of locations in quasi real time.
Looking to the crowd is the new era of real world data capture – it’s
revealing actionable insights about the real world, in real-time, that
retailers and brands have never had access to before.
David Miller
020 3808 5245
BeMyEye.com
Conclusion
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