Every little helps as shoppers think again

Every little helps as shoppers think again

Shoppers are reining back their spending as the credit crunch bites, consumer confidence evaporates and inflation reappears. Just how much food prices are really rising seems to be a matter of some debate. One price comparison website reckons a basket of basic goods is up 15% on last year, while another says the average family has seen its bill at the till climb 20%.

The Office for National Statistics last week officially put food inflation at 6.6%, but Sainsbury's boss Justin King insists the food going through its 800-odd checkouts costs only about 2% more than a year ago.

But two things are certain: shoppers believe their bills are rising quite fast and, albeit slowly, they are changing their weekly shopping habits.

The easiest way to save cash is to chase promotions, use vouchers and trade down to value ranges. The smartest shoppers make a list - but are flexible about their must-buys to take advantage of the best deals.

The big supermarkets are running 50% more promotions than they were a year ago. About £3 out of every £10 spent at the tills of the big grocers is going on goods boasting reduced prices, "extra free" deals and buy-one-get-one-frees. This week Tesco said it was adding another 1,000 promotions - reduced prices, "extra free" deals and bogofs (buy one, get one free) claiming that takes the current promotions to 9,000, the most in its history. The days of supermarkets advertising ethical and green credentials seem.....continued below

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to be behind us for the time being - it is all about price. Sainsbury's says its family meals for a fiver campaign is the most popular it has ever run.

Shoppers are also swapping expensive brands for own-brand "value" ranges. There are even websites - like supermarketownbrandguide.co.uk - that rate the quality and value of cheaper own-label goods to check if it is worth switching. Sainsbury boss Justin King says there has been an increase in what he calls "top and bottom shopping" - customers who buy from premium and basic ranges. He says shoppers are buying cooking ingredients from basic ranges and saving more by splashing out on premium ranges and its poshest ready meals rather than going out to restaurants.

Meanwhile, Morrison's value range is up 13% on last year, but its premium range is up 22%.

Tesco says shoppers rush to more expensive organic ranges is slowing rapidly. A year ago sales were up 30%. Now they are up just 10%. Tesco says it has also increased the number of goods on offer for £1, and they are crowded at the end of aisles.

If consumers are after bigger savings, more radical changes may be required - such as swapping supermarket. Shoppers are generally quite loyal to their chosen store - if only because they get used to a certain layout. But if cash is really tight, it is worth considering a move to a deep discounter.

Monthly data from market research group TNS Worldpanel - which collects data from supermarket till rolls - shows that it is discounters, like Aldi, Iceland and Lidl which are growing fastest. Sales at German-owned Aldi are up 17% on last year, and managing director Paul Foley said shopper numbers are up 25% in the last three months and the number of posher, ABC1 shoppers, is up 17%.