The UK has recently joined the other leading developed economies in officially lifting out of recession. This will begin to test two opposing views of the impact of this recession on shopper behaviour.

1. Swinging Pendulum. One standpoint is that we’ve simply been through another iteration of the economic cycle. Shoppers trade down in the downswing but go back to their regular behaviour once the economy returns to growth. The hypothesis therefore is that normal service is starting to resume.
    
2. Total Shift. An opposite view is that the Credit Crunch has been such a unique and dramatic event that food and grocery shopping will never be the same again. Pre-recession trends are now irrelevant and obsolete.

Neither of these is likely to be proven correct, because this is a false dichotomy and an over-simplification.

	How will shoppers react to the recession?

The Pendulum view is wrong because shoppers are on a continuous journey constantly fashioned by the experiences that accompany them. Only 6% of shoppers say that they’ll go back to normal when the economy picks up.

However the Total Shift theory is also wrong because attitudes are shaped over a long period and some of the reactions to the recession will indeed prove to be temporary.

We therefore need a more sophisticated model to forecast the legacy of the recent recession - one that combines continuing trends, shifts and cycles.

Based on our extensive UK shopper research programme we’ve identified examples of all three types of shopper reaction.
 

Continuing trends – undisturbed by recession:

Branded products continue to be judged increasingly on their tangible merits rather than their aspirational qualities. Over the last six years our research has witnessed the waning pulling power of brand names, declining as an influencer of product choice (from 41% in 2006 to 29% now) and as a justifier of a premium price point (from 50% in 2005 to 20%). This doesn’t mean that the biggest brands are necessarily losing their appeal but does suggest that alternatives are gaining credibility and that a famous name alone is no longer enough to command loyalty.

1. Fairtrade (and also the Rainforest Alliance) has continued to flourish irrespective of recession with support spreading from niche brands, through private label to large multi-national brands such as Cadbury, Starbucks and Nestlé, and underpinned by a groundswell of local activism. Our research has tracked a three-fold increase in the number of shoppers specifically buying Fairtrade products since 2006 (from 9% to 27%). It suggests that conscience-led shopping decisions for affordable items are largely unaffected by personal economic circumstances. Fairtrade factsheet >
    
2. Momentum behind the 5 A DAY campaign has been smoothly sustained throughout the last five years. The proportion of shoppers seeking to eat five portions of fruit and vegetables a day has risen steadily each year (from 32% in 2006 to 43%). This shows both the resilience of the trend for people aspiring to healthier eating and the cumulative benefit of a long term collaborative campaign involving government, industry and the health profession. 5 A DAY scheme factsheet >
    
3. The appetite for more supermarket-format stores to be built has been dissipating slowly but steadily over the last seven years. Supermarkets remain highly popular but most shoppers feel they’re already well served. Instead there’s a growing appetite for alternative channels including hypermarkets, convenience stores, farmers’ markets, online and discount stores.
    

Cycles – starting to swing back as the economy picks up:

1. The importance of quality in driving product purchase decisions has been rebounding as consumer confidence (at least amongst a section of the population) returns. This has been reflected in the sales of various premium products although only where the quality clearly justifies the extra cost.
    
2. Demand for more discount stores peaked in 2009 and has receded since, although there still remains considerable latent demand from around a fifth (18%) of shoppers.
    
3. Store accessibility has fluctuated considerably over the past four years as a determinant of shopping destination, in line with the rise and fall of petrol prices. A pick up in the world economy is likely to lead to further oil price increases making people more reluctant to travel further on shopping expeditions in future.
    

Shifts – set to remain in place post recession:

1. Despite returning confidence and interest in quality, shoppers are even more focused on price now than either at the height of recession or the 2008 spike in food inflation. Events have left an indelible mark on the psyche of British shoppers and continuing ‘good times’ will no longer be taken for granted. Over the last year, price as a driver of purchase decisions has risen from 36% to 47% in IGD’s index. What’s more, 54% expect to be even more careful in their spending choices in three years’ time compared with 5% expecting to be more carefree.
    
2. Increased promotional activity in 2009 has whetted shopper appetites for more. Shoppers are increasingly influenced by promotions and loyalty schemes when deciding where to shop. A quarter (24%) of shoppers identify more promotions as a priority for improving their shopping experience, the same number as a year ago. It’s likely to take time therefore for companies to wean shoppers off their recent heightened dependence on promotions.
    
3. Economic circumstances have accelerated demand for locally produced food. The proportion of shoppers specifically buying local food has doubled over the last five years (from 15% to 30%), and more locally produced food is the second highest priority (behind stable/lower prices) requested by shoppers for 2010. By demonstrating the vulnerability of the world economy, the Credit Crunch has awakened a form of food-patriotism among shoppers keen to support their local economy. We expect this to be long lasting.
    

Examples of three classes of shopper reaction

The recession was certainly shocking but all of the shocks are not yet behind us. This looks set to be another volatile decade with unpredictable events continuing to play a major part.

So trends, cycles and shifts in shopper behaviour will continue to interplay in the UK and other countries. The skill lies in blending these to gain a better forecast of the future and charting the nuances of shopper evolution as they take their next steps.
 

Where will shoppers go next?

We’ve identified five UK shopper segments based on their common attitudes and aspirations for the future.

Healthy Traditionalists (10%). This older group is united by an ambition to eat a healthier diet and a preference for traditional brands and established shopping channels.   Ethical and Alternative (13%). This group is focused on stepping up their ethical consumption and is drawn towards a more diverse mix of shopping destinations.   Techno-Optimists (22%). This younger group consists of early-adopters of technology with a strong concern for the environment and about global warming.   Frugal Pessimists (18%). This, the youngest group, has a downbeat outlook for the future and will be most careful about their food and grocery shopping in the coming years focusing primarily on the cost of food.   Slow Changers (37%). This group contains the most inert, either mild or unfocused in their anticipation of future behavioral change.

More information:

	Shopper Trends 2010
	Keep up-to-date with your shoppers’ needs with IGD's Shopper Trends 2010 report. It examines the factors driving key shopping decisions, highlights changing attitudes to health and looks at how shoppers are assessing both value and values when buying food

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Tim Maton is a Senior Consumer Analyst with IGD, with a wealth of experience in providing shopper insight to a broad range of retailers and manufacturers, including many leading players in the food and grocery sector.

Tim's most recently authored IGD reports include Social Sustainability – The New Competitive Frontier, Private Label vs. Brands - The Shopper Perspective and The Future of Discounters - The Shopper Perspective.