‘Austerity shopping’ of 1980s returns as households squeezed

European, US and Asian consumers are returning to “austerity shopping behaviours” common in the 1970s and 1980s as inflation squeezes budgets for food and household goods, research has shown.

Data group IRI said households were turning back to measures such as making packed lunches, buying cut-price food that is out of date, curbing their alcohol intake and visiting multiple supermarkets to secure the cheapest deals.

The changes in how people shop for household essentials are cutting into sales growth for consumer products and boosting supermarket own-label brands.

The research follows evidence of people cutting back on bigger-ticket items such as clothing earlier in the year as the economic outlook darkened.

Growth in the overall consumer packaged goods category has halved to 1.5 per cent in 2022 from 3 per cent a year earlier, according to IRI’s sales data, which cover 14 key global markets. Alcohol sales through stores are declining, along with consumer spending on household products.

In Europe, supermarket own-brands, which yielded ground to branded goods during the acute phase of the Covid-19 pandemic, are returning to pre-pandemic levels. They now account for 36 per cent of consumer packaged goods sales, up from 34 per cent in May.

So-called private label products are even making inroads in areas such as baby food, where parents are traditionally loyal to well-known brand names, said Ananda Roy, senior vice-president at IRI.

Private labels’ success is partly a result of the growth of discount supermarkets, which command far more of the market than in the recession that followed the 2008 financial crisis, said Roy.

“The growth in private label that we’re seeing now is primarily in food staples. That’s because we are having to look at whether we can get a good deal in the Aldis and Lidls — people are now having to go to Aldi to buy butter and cheese,” he said.

Their rise poses a particular challenge to small and medium-sized makers of branded foods, he said.

“We are anticipating that in the first half of 2023 these manufacturers . . . are going to trigger a price war because they are going to be desperate to maintain volumes,” he said.

Alcohol sales in stores have declined by 6.7 per cent year on year during 2022 so far, said Roy. The drop was partly driven by a return to pubs and bars as coronavirus restrictions lifted but has accelerated in a sign that squeezed budgets are also coming into play.

Alcohol sales over the key summer season were “nowhere near what they used to be in previous years”, Roy said. “Consumption of alcohol has dropped, and that’s quite significant.”