Page last updated at 00:08 GMT, Tuesday, 13 January 2009

What are you giving up in the downturn?

By Anthony Reuben
Business reporter, BBC News

Graph of sales values

It has been a tough December for retailers, and grocers have not been spared in the downturn.

But it is not just that overall sales are falling.

Canny consumers have been trying to make their money go further and that has meant changing the way they shop.

BAKED BEANS SALES GROWTH
Beans on toast
August 18.1%
September 8.8%
October 6.4%
November 21.7%
December 22.6%
Sales value compared with same month of 2007
Source: Nielsen Scantrack

Many of the lost sales suffered by retailers will not be from people who were considering buying something and then decided not to.

They are just as likely be from customers considering buying one product and then instead, buying a different one.

So, while sales on the whole were falling in December, baked bean sales, for example, rose 22.6% in December, compared with December 2007, according to figures prepared for the BBC by the market researchers Nielsen.

A factor that might cause such a rise would be people foregoing a more substantial meal in favour of a cheaper alternative such as beans on toast.

There are certainly signs that they have been buying the bread for the toast.

Premium breads

December figures are not yet available, but sales of standard white sliced bread rose sharply earlier in the year, with increases of 2% in November, 15.2% in October, 20% in September and a staggering 55% in August.

We're starting to see more of a stay-home economy
Charles Davis, Centre for Economics and Business Research.

Products that people buy more of if they have less money are called inferior products, which is an economic term and is not casting aspersions on its quality.

White sliced bread is a classic inferior product; as people's incomes rise they tend to have a smaller proportion of staple products such as bread and rice in their diets.

They also tend to move away from standard white sliced loafs and towards premium breads such as seeded loaves, croissants and bagels.

Some other products show a more complicated picture.

Sales of sparkling wine fell by a relatively moderate 2.3% in December, but the sparkling wine figure excludes the more expensive champagne.

Champagne sales fell 10% in the month, suggesting some people who would have bought champagne are trading down and buying sparkling wine instead.

'Stay-home economy'

The same may be true for olive oil, which used to be considered as a luxury product, but which showed sales growth of 6.5% in December, compared to the same month one year ago.

Bunches of organic carrots
The Soil Association is confident people will continue to buy organic products

Have our preferences changed so much that olive oil is now a basic staple, or are there other factors at work here?

It may be that consumers are sufficiently convinced of the health benefits of olive oil to be prepared to continue spending on it and are instead cutting back elsewhere.

Alternatively, it may be that people are trading down from ready-made dressings and are mixing their own as a cheaper option, or perhaps it is a result of people eating out less and cooking at home instead.

"We're starting to see more of a stay-home economy," says Charles Davis from the Centre for Economics and Business Research.

"People are trying to find a cheaper way of doing things and are looking to prepare things at home."

Other signs of people seeking cheaper ways of doing things can be seen in figures for sales of supermarkets' own 'value' brands.

Sales in this category were around 30% above the same month the previous year, every month from August to November.

"Budget own labels are big news at the moment and I expect to see solid growth in these all year," says Danielle Tolson from Nielsen.

"Retailers will put more support behind their own label lines and they will also introduce more as the recession continues, so growth will be strong."

'Deep green customers'

In contrast, the figures for sales of organic products suggest that they may be regarded as luxury goods by consumers.

Total organic sales fell by 11% in December, which Peter Melchett from the Soil Association says reflects the very difficult situation the country is in.

But he predicts that organic sales are going to hold up relatively well in the downturn.

Its research, "identified that the most deep green organic consumers (who buy the majority of organic products) will continue to do so, because they understand the benefits that organic food and farming delivers not only for them and their families, but also the planet", he says.

He adds that direct sales through organic box schemes are still growing.

More to come

As the country goes through a recession there will be winners and losers.

We have already seen impressive growth from discount retailers while the big supermarkets have put money into value brands.

In the coming weeks, BBC News will be looking in detail at how some other sectors of the economy are faring, going behind the broad economic data.

There will be analysis of sectors such as transport, communications and the DIY market.


Your comments:

I am cooking more stews, casseroles and curries. Bulking out with fresh veg I can make a tasty steak casserole for four for 2.50 really good helpings too.
Shazy, Taunton, UK

I agree with Peter Melchett's comments - the last thing to go will be my organic box. I'm happy to pay the extra money for organic, but realise that this is probably easier when you only have two to feed instead of a large family. It's a shame that organic is seen as a luxury as we should all be entitled to good, healthy food at reasonable prices.
Catherine Jordan, Bristol

We have stopped buying expensive ready-meals and are now making our own meals. We are buying a lot more rice and pasta. We will probably still get our organic vegetables as they taste nicer.
Joanna Sefton, Milton Keynes, UK

During these difficult times my family and I are certainly eating more basic foodstuffs. Back on the menu are the beans (though we still avoid the cheaper own brands of course!) and we have had to return to the non-organic vegetables as these have become simply one luxury too many. All in all I actually think we are living a healthier lifestyle during these difficult economic times, as there is less processed, fast food on our plates and more (although blander) fruit and veg.
Eamonn H, Lancaster, UK

Living alone, the easiest way to feed myself was with prepared meals ready to go in the oven. Individually they were not expensive but the meat, chicken or seafood content was usually not very high. Now I buy the ingredients separately and prepare meals myself. For the same money I can now produce two fairly substantial meals instead of a not very satisfying one. So I'm buying more fresh meat and vegetables and a few jars of ready-made sauces instead of ready-meals. Time rich, cash poor!
Geoff Marsh, Emsworth

Due to the economic down turn and constant doom and gloom I have stopped buying things like Innocent smoothies, I'll either make my own now or buy supermarket own brand fruit juice. I have also stopped buying organic yogurts as well as pre-made shop sandwiches. The things that were once seen as acceptable to be buying every week are now definite treats. I have definitely reduced spending on food and cook far more meals from scratch - which as well as being good for you, is cheaper too!
Steph, Glasgow, UK

We are buying much more store branded 'value' products. The difference in quality isn't that much yet the price difference is huge. Saving us pounds per week now.
Paul C., Whitley Bay, UK

As pensioners we now buy own brand products as these are all round better than big brands, beans are a good example.
Graham Hughes, Knottingley, West Yorkshire

I'm noticing I'm buying more products in bulk and throwing away some as waste, if I can't find someone to share the excess with. With some of the family friendly discounting its often cheaper to buy the bulky pack on offer than what you really need. For example 5kg of potatoes for 49p - I'll only use half before they go off but 1kg will cost a 1 or more.
Nigel, Bristol

The difference now is that instead of just picking up what I want regardless of price, I check the price first to see if its actually worth it, and invariably choose a less expensive option or don't buy it at all. Own brand items are usually made in the same factories as branded items; but I do tend to steer clear of "value" range for meat and poultry.
Debbie Hackney, Romsey, Hants



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