Blog: Polar opposites attract success
Dean Best | 25 July 2007
As we have long been arguing on this site, the continuing rise in the cost of living here in the UK was at some point going to start affecting the food industry.
According to the latest data, retail sales here grew by 4% in the 12 weeks to 15 July, against 6% growth in the previous three-month period.
TNS Worldpanel, the company that conducted the research, insisted that the figures reflected an increased squeeze on consumer spending.
Of course, as with all these things the actual picture is far more complicated than that, with a variety of winners and losers.
John Lewis-owned supermarket chain Waitrose was running ahead of the major chains and at the other end of the price spectrum, discount chains Aldi and Lidl showed double-digit growth, on the back of new store openings.
This seems a strange and inconsistent pattern at first glance with both premium and budget brands performing strongly in the same market conditions.
In truth though, it seems to reflect what we have seen across a swathe of FMCG sectors in the UK over recent years. On the one hand premium products and brands will continue to benefit from the huge wealth being generated by the City - which continues to outperform the rest of the UK economy by some considerable margin.
The everyday consumer is also willing to trade up to premium products on the right occasion, for the right brand. At other times, however, they are becoming more and more price-conscious and ruthless bargain hunters.
As with so many other categories, it will be those trapped in between these two extremes - premium and bargain - that are going to find the going the toughest.
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