Brits’ changing spending habits offer opportunities for own label and brands alike

Bad news for Salt Bae: cash-conscious Brits are set to give pricey restaurants a wide berth as the cost of living soars. That’s according to a consumer survey on rising costs from LEK Consulting, a global specialist in corporate strategy, marketing and sales.

Consumers faced with rising prices in food and personal care “are planning to mitigate the increased expense using a number of tactics”, according to the report. One such tactic will be eating out less often – “and cheaper restaurants will be on the menu, too”.

Will that lead to Mr Bae (aka Nusret Gökçe) shifting fewer £700 gold-leaf tomahawk steaks at his Nusr-Et Steakhouse? Maybe. Will fast-casual dining see more bums on moulded plastic seats? Quite possibly.

And as Wagamama, Five Guys and the like benefit, so too could the value end of grocery, LEK’s report suggests. Shoppers resigned to cutting spend will switch from brands to own-label alternatives and favour “value-focused supermarkets”, it predicts.

It comes amid a growing focus on value lines, such as Asda’s new Just Essentials range. And the report is right to point to the importance of basic options.

But at the same time, it’s not all about cheap ‘n’ cheerful. There are opportunities for premium grocery lines, too.

First, not all consumers will be equally hard up. As NielsenIQ analysis shows, there are several different consumer groups, all of which have been affected by the pandemic and cost of living crisis in different ways.

Second, price won’t be the only indicator of value. Consumers will also be looking at the product quality and added benefits, and assessing whether these justify the price tag.

Finally, even premium options can actually be a way of downtrading. Compared with the amount shoppers would spend on a takeaway or a meal out, they offer a tidy cost saving. 

A Tesco Finest The Ultimate Lasagne 700g is £7.75, for example, and a Waitrose No.1 Spinach & Ricotta Pizza is £6.25. You’d spend far more in an Italian restaurant, even in a cheaper casual dining chain.

The pizza example also highlights the opportunity for premium, restaurant-style brands. A Pizza Express Classic Fiorentina is £6 in Waitrose. In its restaurants, pizzas tend to come around the £15 mark. You can see the opportunity for its grocery range.

It’s a complex landscape, and one we will be exploring in The Grocer’s upcoming two-part webinar series on the impact of the cost of living crisis: one looking at brands, and the other on own label. The first webinar, ’How can fmcg brands survive the cost of living crisis?’, will air on Thursday 22 September at 11am. The second webinar, ’How will own label evolve in the cost of living crisis?, will air on Thursday 29 September at 11am. 

As these discussions will highlight, it’s clear consumer behaviour is going to change as costs bite. But arguably, affordable treats are more important than ever. Now, who fancies knocking out an own-label take on Salt Bae’s £1,350 striploin steak?