European, American and Asian consumers are returning to the “austerity” behavior common in the 1970s and 1980s, as inflation strains budgets for food and household goods, research shows.
Data group IRI said households went back to measures such as making packed lunches, buying cheap expired food, cutting back on their alcohol consumption and visiting multiple supermarkets to get the cheapest deals.
The changes in the way people shop for household supplies are reducing sales growth for consumer products and boosting supermarket private label brands.
The research follows evidence that people cut back on higher-ticket items, such as clothing, earlier in the year as the economic outlook darkened.
According to IRI sales data, which covers 14 key global markets, growth in the total consumer packaged goods category has halved to 1.5 percent by 2022, from 3 percent a year earlier. Sales of alcohol through shops are declining, as is consumer spending on household products.
In Europe, supermarket own brands, which have gained ground for branded goods during the acute phase of the Covid-19 pandemic, are returning to pre-pandemic levels. They now account for 36 percent of consumer packaged goods sales, up from 34 percent in May.
So-called private label products are even penetrating areas like baby food, where parents are traditionally loyal to well-known brand names, said Ananda Roy, senior vice president at IRI.
Private label success is partly due to the growth of discount supermarkets, which have a much larger market share than in the recession that followed the 2008 financial crisis, Roy said.
“The growth in private label that we are now seeing is mainly in basic nutrition. That’s because we need to see if we can get a good deal in Aldis and Lidls – people have to go to Aldi now to buy butter and cheese,” he said.
Their emergence poses a particular challenge for small and medium-sized branded makers, he said.
“We anticipate that in the first half of 2023, these manufacturers . . . will provoke a price war because they will be desperate to maintain volumes,” he said.
Sales of alcohol in stores so far have fallen 6.7 percent year-on-year in 2022, Roy said. The decline was partly driven by a return to pubs and bars as coronavirus restrictions were lifted, but has accelerated in a sign that tight budgets are also starting to play a role.
Alcohol sales during the main summer season were “not anywhere near what they were in previous years,” Roy said. “The alcohol consumption has gone down, and that’s quite significant.”