New research commissioned by Palmer & Harvey, the UK’s biggest delivered wholesaler, shows that consumers will manage their budgets in the face of food inflation, which is expected to accelerate to more than 3% by the end of the year, and pressures on real wage growth.
According to the research, conducted by Retail Economics and published today, consumers are already feeling the impact of rising prices and intend to switch products, brands, and supermarkets as well as cutting back on eating out in favour of regular home cooking.
Data from a survey of over 2,000 national representatives shows that almost half of the respondents would initially cut back on ordering takeaways and eating out in restaurants in order to keep within their budgets, whereas a further 35% would limit spending on recreational activities such as going to concerts, the cinema and the theatre.
An overwhelming 73% of those questioned agreed they would prefer to stay at home and cook a meal if they felt personal finances were under pressure.
Consumer spending habits could also change the way families approach their weekly food shop, with more than half indicating they would trade down to cheaper own-brand alternative, whilst 47% would consider switching to a cheaper supermarket altogether.
This trend was especially prevalent in 16-24 year olds, with two thirds of respondents suggesting they would happily abandon traditional loyalties.
Martyn Ward, MD of Palmer & Harvey, commented: “Consumers are currently only feeling the thin end of the wedge or rising prices, yet an uncertain political and macroeconomic backdrop and a weaker outlook for personal finances means consumers are less optimistic about the future of the economy and are poised to tighten their belts as inflation outstrips wage growth.
“Our research shows that it will be critical to the success of food and grocery retailers, wholesalers and suppliers to rapidly adapt to changing consumer behaviour, as shoppers shift towards own label, cheaper alternatives and cut back on any non-essentials. Those that quickly grasp the opportunity to evolve their product mix and pricing will be the winners in this challenging environment.”