A new report from Mintel highlights an optimistic future for today's food consumers, with over 50% of adults seeing an improvement to supermarket value for money.

Latest research from Mintel shows growing consumer satisfaction with value for money by Britain's major food retailers. British consumers have benefited from lower prices on many items, as a result of downward pressure on prices from Asda/Wal-Mart and the investigation carried out by The Competition Commission.

Tesco continues to gain favour, while loyalty cards suffer a downward trend in the popularity stakes.

Value for money - growing consumer satisfaction Encouragingly Mintel's research reveals that today's British consumer is increasingly satisfied with the value for money offered by major multiples. Of the 992 adults questioned, 53% agreed that the food at the supermarket where they did their main shopping is better value for money now than 12 months ago.

Those in the North West appear most satisfied with pricing while those in the South are the most likely to disagree that shopping is better value for money.

Agreement was highest among shoppers at Asda (69%) and Morrison (61%), while 55% of Tesco shoppers and 47% of Sainsbury's shoppers believed they were getting more for their money.

"Overall, Britain's shoppers feel more satisfied with pricing than 12 months ago. In fact only 10% of adults felt that food was not better value for money than 12 months ago" comments Richard Caines, Retail Consultant.

Somewhat surprisingly, store size presents a greater problem for today's British shoppers - with those most put off by large stores seeking out smaller grocers.

While an average of 43% of adults find some supermarkets too big, this peaks to 53% of those aged 65 plus. "The fact that today's Britons are satisfied with food pricing reflects the drop in real prices for many food items over the past 12 months" comments Richard Caines.

Consumers benefit from low food prices

The UK market for sales through food stores was valued at over £90 billion in 1999, an increase of just 3.5% over the previous year. Sales through non-specialised food stores, which included the major supermarkets, did not fare that much better, increasing by 4% in 1999 to around £75 billion.

"Low or negative inflation has been driven by the so-called Wal-Mart effect, i.e. downward pressure on prices from Asda/Wal-Mart's aggressive everyday low pricing strategy - and by concerns over the possible findings of The Competition Commission investigation into the UK grocery retailing market" comments Richard Caines.

Mintel research conducted in September 1999 indicated that 29% of those that do not currently shop at Asda would travel up to four miles to shop if prices were 15% lower. The willingness by many consumers to shop around to get the best prices has intensified competition in the sector.

Attractive prices top priority for today's female shopper In terms of how consumers choose their primary shopping destination, location and price are still clearly the most important factors, followed by range, quality and hours of opening. Attractive prices are an influencing factor for 46% of adults. Those influenced by price have declined eight percentage points in just one year. Women appear more price conscious than men, while price becomes more important generally away from London and the South East.

Own-label ranges are also more important to women than men, with 26% of women considering this an influencing factor compared to 19% of men. Research has consistently shown that men are more likely to buy branded grocery goods than women, because they are reassured by the quality promised by a known brand.

Desire for home delivery is relatively unimportant in determining choice of store with just 7% of adults looking for this service. "For a large proportion of the population there is some implied inconvenience receiving a delivery, this requires the customer to be available at home, possibly for several hours" comments Richard Caines.

Dwindling loyalty card popularity Tesco has continued to enjoy rising popularity, with almost a quarter of the population now claiming to use Tesco as the source of their main grocery shopping. Asda is also enjoying dramatic progress with 18% of consumers using the store as their primary source for grocery shopping. Interestingly, Asda has not introduced a loyalty card, and according to on-going Mintel research, interest in loyalty cards has declined year on year. This year just 16% of adults considered loyalty cards an influencing factor compared to 21% of adults in 1999. "Loyalty cards have been criticised for rewarding heavy spending rather than true loyalty, and indeed the segments most interested in them are the affluent groups who can afford to build up their points, even if they hold cards from more than one store group" comments Richard Caines.

Slow Value Growth Forecast

Looking forward, value growth is expected to be slow, with the continuing pressure on prices, fierce competition for share, and demographic changes all resulting in a market offering few opportunities for growth. Retailers will, therefore concentrate on added-value products such as the booming food-to-go sector, premium products, on increasing own-label's share of their business mix, and on supply chain and other operational improvements to drive costs out of their business.

Small food retailing businesses are still being driven out as the majors expand their operations and even take on the convenience retailing sector. The widely-reported dramatic decline in numbers of independents has continued over the time period - down by just over 20% since 1993.