Changing Behaviour In Exceptional Times

UK Grocery inflation is at record levels. Latest Kantar data shows like-for-like Grocery price inflation at 11.6%, the highest level recorded.

Inflation is being driven by multiple and interrelated factors, there has not been such a convergence of inflation-driving factors since the 1970’s. Of course, energy prices are a key factor, but other drivers include shipping & transport disruption, labour gaps, and weather extremes. These drivers mean that we will see further increases in inflation over the next year, with some forecasters saying it could be as high as 18% in January based on recent energy price increases.

At the same time, UK households are suffering the biggest decline in disposable income for a decade (Asda’s income tracker shows a 16.5% YoY decline, even before further increases in energy prices later this year). This decline disguises significant differences across income groups; inequality is growing and there are an increasing number of households struggling to cope.

What will this mean for Grocery?

To understand what this will mean to Grocery shopping we need to understand lessons from previous recessions, including looking all the way back to the 1970’s. Overall shoppers can mitigate Grocery inflation by buying cheaper products, from cheaper stores, on promotion, or even reducing volume by cutting categories or brands.

Rise of Private label

Private label share always grows during recession. Latest Kantar data shows private label holding 51.6% of the Grocery market, the biggest share ever recorded. Branded share is likely to continue to fall in this recession as the absolute price gap with private label widens, brands reduce marketing investment and loyalty declines as price elasticity increases.

Shifting store choice

Store choice will also change with discounters increasing their market share, the mother of the Aldi founders understood this well when she famously said, “the worse the times, the better it is for Aldi”. Latest Grocery share data shows Aldi and Lidl with a combined share of 16.1% in the UK, up from 5% 10 years ago, Aldi is just about to overtake Morrisons, and Lidl is now bigger than the Co-op. This discounter growth will further increase total private label share.


In the last recession there was more reliance on promotions to reduce shopping bills, but it’s harder to hunt out these deals in 2022. The latest % sold on promotion is at 24.7%, while 14 years ago it was at 30%. Supermarkets are currently focused on everyday low prices, value ranges and price matching.

Consumption reductions

In what is the most worrying impact of all, Kantar is already seeing evidence of eating less by struggling households. For instance 1 in 10 struggling consumers are skipping breakfast.

Pandemic habits continuing

Some recessionary impacts will be exacerbated by habits picked up throughout the pandemic. These include; more scratch and batch cooking; families eating together more; less food waste, more using up; health declines in importance; snacking providing a little affordable treat; less looking for innovation, more sticking to what you know; more carried out as OOH declines, and potential growth of some premium ranges as eating out declines.

The phrase “exceptional times” is often overused but with the highest inflation for 40 years and declining real incomes the next year will see significant changes in shopper and consumer behaviour, impacting all aspects of retailer and supplier businesses.