by Simon Wright

Created on: July 20, 2011

We live in a global economy and the pain of the credit crunch fuelled recession is being felt in all corners of the globe. One worrying fallout from the economic disaster has been a pronounced increase in the cost of food items. The ways that consumers are reacting to increased grocery prices are broadly similar from country to country and include quite a number of strategies.

Switch to supermarkets and to cheaper supermarket chains:
The days of the family corner shop as the main grocery outlet were threatened long before we ever heard words such as sub-prime or credit crunch but the economic malaise has further accelerated the shift away from them to large supermarket chains. The supermarkets can afford to sell their produce more cheaply, largely due to economies of scale, and consumers (often reluctantly) are increasing the percentage of groceries that they buy in a big weekly shop from these sprawling superstores.

However, within the supermarket sector, some consumers are migrating away from the better known supermarket chains to lower cost ones. In the UK, for example, chains such as Aldi and Lidl have been growing in prominence, largely due to their ability to cater for cost conscious customers.

Switch to cheaper produce, including own brand items:
As consumers find that their disposable income isn’t stretching as far as it once did, they are facing difficult questions about how to continue to put food on the table, whilst also meeting all their other financial needs and lifestyle wants. In a bid to reduce their grocery bill back to past levels, some consumers are switching to lower cost items, and/or are picking own brand items over more expensive branded produce. It’s not that many generations ago, in some parts of the developed world, that red meat was a luxury reserved for the Sunday lunch, and some households across the UK will undoubtedly be cutting back on the amount of lamb and beef steak that they are consuming as such items can levy a hefty burden upon the weekly budget.

Budgeting is making a return:
Talking of budgets, budgeting is making a long overdue return to the common consciousness. We’ve had an era of overspending on credit cards and perhaps we are now into a new age when households will increasingly have to count their cash and adhere to a disciplined financial approach. With regards to food prices, households are marking the amount they can afford to spend, either on a weekly or monthly basis, and are closely monitoring

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