Impact of economic recovery small as food volumes fall

By Rod Addy

- Last updated on GMT

Related tags Iri Marketing Economics

Food volume sales are falling, according to the new report by IRI
Food volume sales are falling, according to the new report by IRI
Food and non-food volume sales are falling, indicating ordinary people are not feeling the benefits of economic recovery in Europe and the UK yet, according to market analyst Information Resources (IRI).

Commenting on the firm’s recent Special Report on the European own-label market, Tim Eales, IRI director of strategic insight, told its latest research suggested consumers were not benefiting from an economic revival.

“Our data is showing one of the deepest periods of volume decline we have ever seen. People are cutting back on food and non-food purchasing or at the very least changing the way they shop.”

IRI’s data accounts for sales through traditional grocery channels, including top supermarkets, convenience stores, independent retailers and petrol station forecourts. But they did not cover deep discount stores, such as Poundland, Eales explained.

‘Shopping habits significantly changed’

Sales therefore could be increasing in that area to the detriment of other channels, but this would mean shopping habits had significantly changed, he said.

He also referred to recent coverage of the rise of food banks, low wage increases and the increase in the cost of energy bills. “This doesn’t feel like an economic recovery for ordinary people in ordinary houses.”

Eales said IRI’s report indicated the price gap between branded goods and retailers’ own-label ranges was narrowing as retailers reduced promotions on own-label products and increased their quality.

UK own-label goods were on average 27% cheaper than branded equivalents, with the gap having narrowed by 0.3 points in the year to June 2013, he said.

The price gap had closed the most in chilled, fresh and frozen food, he said. “In some cases, premium​ [own-label] products are going to be more expensive than brands.”

Extra £50M

The increased price of own-label food and non-food products had netted UK retailers covered by IRI an extra £50M in the UK alone in the year to June 2013, he said.

“This is partly because more products are going into premium ranges, but it may also be because the level of promotional activity on own-label is shrinking,” ​Eales added.

At the same time, the report, Private Label 2013​, indicated manufacturers of branded products were maintaining promotions to retain their market share in a highly competitive market, he said.

Branded goods continued to perform well, showing an increase in value sales in the year to June 2013 in all categories except alcohol, which fell by 0.4%, according to IRI’s report.

However, Eales questioned the sustainability of their heavy promotional stance. “Can brands continue to throw the money behind promotions that they have been? Manufacturers are giving out the message that enough is enough.”

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