BrazilEuropean consumers call for price caps on essential groceries
Consumer behaviour is rapidly changing as record inflation rates push up the prices of groceries. With basic goods becoming more expensive, some consumers are calling for government action when it comes to keeping essential goods affordable.
There are some things which probably don’t need much research to confirm. The Pope lives in the Vatican. Bears go to the toilet in the woods. And if crippling inflation rates bump up the cost of living at a rate which outpaces wage increases, most consumers will be forced to find ways of economising.
As obvious as it might sound, however, consulting firm Oliver Wyman has put its resources toward thought leadership proving that last point – and, importantly, highlighted what exactly many consumers expect governments to do about the situation.
According to a poll of 7,000 consumers in Europe conducted by the management consultancy, one-third of consumers switched supermarkets over the last 12 months. The main driver of this was, inevitably, the need to find groceries at cheaper rates, due to the heightened cost of everyday basics.
As a result, consumers are cutting back on their spending in expensive supermarkets, such as Marks & Spencer, Géant or Waitrose. Meanwhile, they are shifting to discount stores such as Lidl and Aldi, or to supermarkets which have pivoted to distinguish themselves with low prices amid the current crisis.
Switching between supermarkets only goes so far, though. A 38% chunk of consumers have also increased their purchasing of store-brand products – often very similar to leading brands but at a cut price – while 25% now buy in bulk, in an attempt to find savings in the long-term. And 27% buy more fresh produce to cook themselves, rather than purchasing ready-made meals – which come with additional labour and packaging costs.
This is also underlining a key issue with one of the leading lines in ‘sustainability’ thinking from many corporate sources. Throughout the last three years, multiple reports have declared a rising number of consumers would ‘pay a premium’ for more sustainable goods – suggesting this would help the market become greener without the need for government intervention.
However, with consumer spending power waning drastically, price has re-asserted itself as the decisive factor in consumption – greatly diminishing the power of ‘voting with your wallet’.
A price cap for food essentials
Oliver Wyman also found that many consumers believe that governments should now intervene in the market. Roughly two-thirds of the Europeans surveyed suggested there should be a legal maximum price for basic products in the supermarket, while another sizeable chunk recommended the imposition of a cap on price increases supermarkets could implement.
However, the situation may not be so easily resolved, according to Marco Kesteloo, a retail expert at Oliver Wyman. While many consumers think that retailers are solely responsible for price increases, that is “not entirely correct”.
Kesteloo added, “We see that suppliers are taking advantage of the situation to raise their prices and thus increase profit margins. Retailers, on the other hand, are trying to curb those price increases. Retailers who want to remain competitive are increasingly settling for a lower profit margin.”
