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An uncertain economy FDIN Seminar June 2008 Qualitative insights 1.

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1 An uncertain economy FDIN Seminar June 2008 Qualitative insights 1

2 Lesley Thompson: background Founded ‘Changes’ in 1997 Qualitative research-based consultancy Particular interests in food, retail, health and wellbeing in context of cultural trends Broad previous experience Head of qualitative unit at The Research Business Advertising agencies and client company marketing, as well as qual and quant research agency experience Wide range of food, drink and retail clients over time FDIN Seminar June

3 Scope of this presentation Range of relevant topics covered in 30+ group discussions (plus accompanied sessions and depths) over last 6 months  Grocery shopping in supermarkets  Fairtrade, organic, local produce, ‘ethical’  Discounter grocery retailers  High Street takeaways/more upscale eating out  Lunchboxes, soft drinks, cakes/sweet treats, home-baking  (Health and wellbeing, hotels, cinema, savings and investment, charity)  Rising prices emerging as a topic every time across this period - to varying degrees  ‘Top up’ research for this seminar - early June x groups, spread across lifestages, social class, retailers used and where eat out FDIN Seminar June

4 Feeling uncertain? We are all very aware of the endless headlines re: price rises, tend to assume everyone else is just as engaged Differing patterns of when people first noticed, what was noticed, and practical + emotional responses  Earliest: price of groceries (and presents) pre-Christmas 2007, got worse across the board since, in the news/people are talking vs.  Just awakening: petrol, maybe energy, some food - but only noticed something in passing in past few weeks FDIN Seminar June

5 Triggers to price rise awareness Cumulative effects - notice a series of rises and associated events, combined with personal situation and influences Reach a tipping point - now not just a passing annoyance May then need to reach a further point before taking any action FDIN Seminar June Petrol Gas/ electric Food - total grocery bill Food - specific items e.g. bread, milk Prices Personal Mortgage/ house values Job insecurity Illness Personality type: face up to fears vs. blinkered, denial Family, children’s needs External Friends in difficulty e.g. redundancy Follow news, politics Full time job, prices a work topic £££

6 Noticing price rises FDIN Seminar June “It’s the money, I pop in to get a few bits then come out and I’ve spent £100” “I think I read somewhere that the average shopping basket has gone up £15 per week” “My gas has gone up so much that I thought I had a gas leak, it’s that bad, I couldn’t believe it, I rang them up” “You get less in the basket for the same amount of money” “I’ve noticed it’s all gone up but you still get what you need” “I used to go up the shops with £1 knowing that would get me my loaf of bread, but now I take a fiver because I have no idea” “Every time you look at petrol it’s gone up again”

7 Engagement differs Most aware and responsive More downmarket, cash strapped, needs must  Fixed or low incomes, reliance on benefits/tax credits  Pensioners, mums and More upmarket, outgoing, follow news and world events  Some full time working, prices a work topic, gives legitimacy  Higher income but high outgoings - mortgage, children, worry over house value Less aware and/or less responsive Usually quite blinkered, inward looking  Often non working or part time/ local  Family focus Suspect some very fearful of disturbing status quo, degrees of denial  What if breadwinner loses job?  What to tell the children if can no longer afford favourites? Across social classes FDIN Seminar June

8 Whose fault is it all, anyway? End 2007/early 2008  tendency to blame greedy retailers, manufacturers and utility companies More recently, likely to understand that there are broader, cumulative forces at work  Northern Rock, US sub-prime, ‘credit crunch’, greedy bankers  Worldwide food pressures, links to climate and global warming But do feel that UK businesses and government should bear some of the pain, not seek to pass everything on to customers FDIN Seminar June “The big supermarket’s profits are going up so it can’t be that much of a crunch for them” “It’s happening everywhere, so you have to make the best of it - and you feel like it’s not necessarily in the supermarket’s control” “All you hear these days is credit crunch, credit crunch, it’s something to do with America and lending people money to buy houses they can’t afford” “We all realise it’s a world thing, oil has gone up, but why do the government still have to take the same amount of tax?”

9 Other significant trends These do not suddenly disappear in the face of price rises Organic, Fairtrade, other ‘ethical’  Prices more competitive as become more mainstream  Free range chickens fuelled recently by Jamie, Hugh  Dislike of over-packaging Local/regional/named provenance  Freshness, farmer’s markets, local shops Higher quality, innovative prepared foods (M&S, Waitrose, Finest, Taste the Difference etc.) Health in all manifestations  Significance of labelling  Avoidance of additives and over-processing  Soft drinks and snacks banned from lunchboxes Grazing, snacking, convenience Diversity of eating out options, new cuisines FDIN Seminar June

10 Other significant trends FDIN Seminar June “I am spending more time looking at what the ingredients are, you’re more aware” “The quality of ready meals is much better than they were a few years ago, and they’re more healthy, like the steam ones” “M&S will introduce you to the farmer and the strawberries will say what farm they’ve come from” “Since Hugh did that chicken programme my chicken and eggs have to be free range” “The price of organic is dropping down and down, the more the demand the more prices will drop” “You get things a bit more like you get in restaurants, pork and leek sausages, aisles like World Foods” “With Fairtrade I just feel like I’m doing my bit”

11 Responses to price rises Five main behaviours Ignore for as long as possible Cut down on other things before food Use different retailers Change food shopping patterns Change actual food purchases …..and combinations of these FDIN Seminar June

12 1. Ignore for as long as possible Some genuinely not that affected yet, high disposable income Others blinkered, overtly not bothered, covertly scared of being forced from familiar comfort zone  Loss of status, trappings of success - more upmarket  Disturbing insular home and family Busy mums can tend to pay for everything with cards, scarcely look at totals, just assume enough in account to cover  Terrible shock if suddenly in the red Petrol and gas/electricity prices often noticed before food FDIN Seminar June “I don’t really look at the prices, I go in and think ‘well I need that’ and pick it up” “I think people are getting into debt because they just keep using their credit card, then when their salary comes in realising it doesn’t cover the bill and they go further and further into debt, then you’ve got the mortgage problem”

13 2. Cut down on other things before food Food a priority, so cut down on clothes, home improvements, going out Use car less, watch energy consumption Mums: spend less on self in order for kids to not go without  Cancel gym, less/cheaper clothes, even eat less so can give to them Eating out reduced  Go less frequently  And/or lower status restaurants, takeaway rather than go out  Cook self rather than takeaway FDIN Seminar June “A lot of people I’ve spoken to are tightening their belts, they’re saying they don’t think they’ll eat out so much, or they’ll buy less clothes, because they don’t know if their mortgage is going to go up” “I’ve noticed that restaurants are a lot emptier, also that there’s no need to book now” “For dinner, if there’s not enough, I’ll make sure they have a proper meal and say ‘oh I’m not hungry, I’m just having something on toast’ so they’re none the wiser”

14 2. Cut down on other things before food Staying in as new going out  DVD and takeaway rather than cinema and food  Eating at home with friends rather than at restaurant  Learning to cook more from scratch  And even starting to grow own food FDIN Seminar June “We’ve started growing some of our own stuff in a small way, we have fruit trees in the garden, tomatoes, beetroot, that sort of thing” “We’ve been through all the convenience meals, I think we’re coming out the other end, back to cooking and growing your own” “I’d rather cook at home and watch a couple of films, the cinema’s too expensive” “It’s just so nurturing, you feel like you’re going back to nature”

15 3. Use different retailers Promotions-conscious, shop around for best offers  Internet comparisons make easier, but practical time limitations Internet for bulk, save on petrol Experiment with ‘cheaper’ mainstream retailers e.g.  Asda for branded bulk goods  Morrisons - shops within shop suggest freshness Use local/alternative retailers more - freshness and quality as much as savings  Greengrocer often cheaper (and fresher) than supermarket  Feels like supporting local farmers and less food miles if use butcher  Farmer’s markets in cities, farm shops in more rural areas  Organic boxes Resistance to ‘local’ formats of grocery retailers e.g. Tesco Express - price premiums and lack of offers compared to main stores FDIN Seminar June

16 Use different retailers FDIN Seminar June “I have started using more of the local shops, the local greengrocer is much cheaper and the fruit & veg stays fresher longer” “Go back more to seasonal and local products” “I’ve got time to go from shop to shop and get the various offers, then I cook it from scratch, so it’s a lot cheaper” “I think you spend less on the internet, you only buy what you want, if you go shopping you see all these things” “The trouble with the big supermarkets is that you’re bombarded with food, too many choices” “I went to a fruit and veg shop, and you can buy two bags for less than £10, and it’s fresh, it lasts longer”

17 3. Use different retailers: discounters Aldi, Lidl, (some Iceland)  Long term use for cash strapped, pensioners etc.  Still some stigma for blinkered, a sign of failure?  But increasing use across classes and ages - quite ‘smart’, Primark analogy, shop at Waitrose and Lidl  Trial and error, friends recommend specifics  Unknown ‘foreign’ brands assumed to have status in country of origin  Cheap, fresh, loose fruit and veg FDIN Seminar June “I have a friend who had this beautiful ice cream and I asked where it was from, she said Lidl and I couldn’t believe it” “Their vegetables often come down to half price and they are very good, very fresh, and they are loose so you can choose what you want” “There’s nothing wrong with the stuff, the quality is all right, it’s just not packaged the same”

18 Discounters become a ‘smart’ choice FDIN Seminar June

19 4. Change food shopping patterns Significant increases in commentary about food wastage Partially because food costs more, so see far more £££ being literally ‘thrown away’ Also pressure to recycle (food in some areas) increases awareness  Waste minimisation strategies ‘Big shop’ less frequent, with less fresh food Avoid biggest supermarkets  temptation too great Shop every few days for what know is needed May use high quality retailer (Waitrose, M&S) justified by so good that none thrown away Flexible sizes e.g. loose fruit and veg, buy from deli Use up or freeze leftovers Reject other waste i.e. anything over-packaged FDIN Seminar June

20 Food (& other) wastage FDIN Seminar June “Why are they still using horrible plastic bags for veg? - they should be paper” “I’ve got a lot of wastage in the fridge, I’m trying to cut down on it by buying fruit and veg locally every 2 to 3 days rather than buying it in the supermarket and throwing it out” “There is a general awareness of what’s going on, you do think more about what you’re doing, what you’re throwing away, we shouldn’t be wasting all that food, especially when you’ve paid so much for it” “You should buy loose mushrooms in a paper bag rather than in a box and with plastic”

21 5. Change actual food purchases Buy more: On promotion, but only if will use - otherwise wastage  BOGOF’s great, cook/freeze vs. reject as lack storage space, or not use On sell bys, especially high quality half price e.g. Waitrose Cheaper variants, but only if proven quality by trial/error  Own brand, ‘Value’ lines, foreign deli items with assumed quality  If disliked, poor value Ingredients and recipe aids e.g. spices  Cooking more from scratch and looking for help and inspiration FDIN Seminar June “We cut back in small ways, don’t go out to eat so much, then look more towards the Sainsbury cheaper versions” “Every store is doing something, some compensation for the prices going up, get this free, get all of this for a tenner” “I’ve started timing when I go shopping, it’s ridiculous, I know when they are going to reduce it!”

22 5. Change actual food purchases Buy, could be more or less frequently: Genuine high quality, still need some treats  Instead of eating out - current M&S £10 promo of 2 x meals and desserts + bottle of wine  Hard to make from scratch - buy from restaurant or deli?  In tune with other trends e.g. natural, organic  Or as consolation e.g. booze, chocolate FDIN Seminar June “M&S are addressing the fact of people not having so much money, but still wanting to have the experience of eating out” “I think people are enjoying eating in more, with my group of friends it’s like ‘I’m going to cook this, you bring the wine, you bring the dessert’ ” “I do make sure I have my wine, I think ‘why shouldn’t I?!’ ” “Things like organic have become important to me, I’d probably buy less but keep the quality”

23 5. Change actual food purchases Buy less or none: Over-packaged convenience foods  Especially if cannot justify via health, freshness Unnecessary small indulgences e.g.  ‘Instant’ cappuccino  Cereals with ever more exotic ingredients Things some people can make quite easily e.g. basic tomato pasta sauce - others would still buy packaged ‘Big ticket’ regular luxuries e.g. top-end desserts FDIN Seminar June “I look at the ready made desserts and think ‘why are you thinking of buying that, what’s in that?’ ”

24 Experiences of economic uncertainty 15+ years of growth, last economic ‘blip’ lasted from Big Bang into the early 90’s Responses to current climate therefore very variable by age  Youngest have no direct experiences, maybe some tales from their parents - can embrace as a novelty  Mid-aged the most apprehensive, as more likely to have dependent kids, mortgages - and some previous memories of downturns  Oldest have seen the cycle a number of times, more accomplished at cutting back - but fearful if on low fixed incomes  Some feeling across demographic groups that we’ve had ‘cheap food’ for almost too long, maybe an overdue adjustment? FDIN Seminar June “£2.99 for a whole chicken, it’s not a bargain, it’s too cheap” We just take everything for granted, maybe we need to go through a few hardships and be more prepared for it”

25 What about food ethics? Some say that lack of ethical behaviour, global warming etc. has exacerbated current food shortages and higher prices Price rises do not mean we all suddenly forget our learned environmental awareness FDIN Seminar June Price rises Environmentally concerned behaviour Can reconcile: good quality, less wastage, give more of my time, a return to “good housekeeping” Home focus a defence against uncertainty?

26 Differing responses to uncertainty More upmarket, intelligentsia, maybe no kids  Catharsis, novelty  Eat in, cook more from scratch, use leftovers  Local, organic, grow own  Buy ½ price on sell by at Waitrose, try Aldi FDIN Seminar June Inward-looking mums  Fear, difficult to even articulate  Cut back for self  Try to preserve kid’s lifestyles as long as possible Older, kids leaving/ left  Pragmatic, “here we go again”  More time to shop around for offers, buy less more frequently  Also cook more from scratch, growing own Poorest - across lifestages  Buy less and/or lower quality, as fixed budgets  Buy money off offers, not BOGOF’s, shop around for cheapest  Use the discounters

27 NPD themes and triggers Value  Not necessarily low price, but adding value through needs insights e.g. embrace feelings of catharsis, feels like homemade Polarisation  Everyday prudent shopping and cooking vs.  Allowable luxuries, justified by quality, local produce, complexity etc. Minimising wastage  Food/portion size flexibility + quality  Less packaging Inspiration  Everyday meals from scratch, leftovers  Cooking to entertain others Channels  Smaller, more local shops - independents? Discounters? New formats from main retailers? Restaurants providing takeouts for home use? Communications sensitive to mood of the times - no more gloating bankers! FDIN Seminar June

28 Thank you


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