Fuel rebates, gas price brakes, temporary financial support: Governments across Europe have come up with numerous ways to help ease the sting of inflation for their citizens. Now a large proportion of consumers are expressing support for governmental help buying groceries.
According to a new Oliver Wyman consumer survey, 92% of European consumers said they believe price intervention with regards to groceries or food in general is necessary, while just 8% said they are opposed to government intervention. The survey collected 7,000 responses across six European countries.
But which government interventions are consumers keen to see in order to bring surging grocery prices under control? There was no consensus among several suggestions survey participants could choose from in a multiple-choice question. Forty-four percent said they favor an upper limit for price increases depending on the product group, while 37% saw government-imposed price caps on an average grocery basket as a solution, and 25% called for granting companies permission to offer aggressive discounts even if they go below the purchasing price. Ten percent said they would like canteen food to be subsidized by the state.
From a business perspective, government intervention can hardly be considered a healthy solution to the apparent challenges faced by customers. Rather this “cry for help” must be seen as a signal that efforts undertaken by retailers and producers – both in terms of action and communications – are not getting through. Open disputes and public blaming seem to undermine consumers’ trust whether their needs are still centerstage for retailers and producers.
Fading customer loyalty
Rather, the survey reflects growing disappointment in the grocery sector: Only 32% of respondents rated retail performance as good or very good.
Customers experience food price increases as so severe that they want to use all avenues to be able to shop more cheaply again
According to the survey, one-third of consumers said they changed their main place of purchase last year. Younger people in particular turned their backs on their regular store: Among 25- to 34-year-olds, almost one in two said they switched.
The new route usually leads to large supermarkets or discounters. Full-range supermarkets are the main place to shop for 46% of respondents, while 29% named discounters, and 14% said they prefer hypermarkets. It is becoming increasingly difficult for pure organic supermarkets: Only a hardcore contingent of 2% of survey respondents said they prefer organic venues. Online supermarkets and express delivery services came in at 7%.
Private label tactics can work
In the mass market, a battle between discounters and traditional supermarkets has been simmering for years, with the "one-stop shopping" argument swinging the pendulum in favor of supermarkets during the COVID-19 phase.
But convenience and safety advantages are fading, and price is becoming the determining factor in view of tight household budgets. Splitting up the shopping is becoming the norm again: Consumers buy the basics at the discounter first, then the rest at the classic food retailer. However, supermarkets are increasingly playing the price card. Via their own brands with a low price point, they can give discounters a run for their money.
The survey also suggests private label tactics can work: 41% of respondents said they thought the price gap between discounters and supermarkets had narrowed recently. Only 19% said the gap had widened.
By embracing price competition, supermarkets can turn the situation into an opportunity. Thirty-eight percent of respondents said they are buying more private label than before, particularly in Spain (54%), Germany (51%), and Austria (48%). Thirty percent of consumers said they remain brand-conscious but are paying more attention to price, while 27% respectively 25% cited cooking more themselves or buying larger packages as their personal savings strategy. Only 10% said they were not affected by the price crisis.
When it comes to the question of who is to blame for the price increases, there was no clear culprit according to consumers: 24% said they see those responsible in the ranks of the manufacturers, 31 % placed the main blame with the retailers, and the rest were undecided. However, in light of the overall results of the survey the best advice to retailers and producers is to seek common solutions and jointly focus on customer priorities, both in communication and in actions.
About the survey
The survey asked consumers about their mood when shopping for groceries. In October 2022, a total of 7,000 consumers in six European countries were surveyed — 1,000 each in Germany, Spain, Austria, France, and the Netherlands, and 2,000 in the United Kingdom.