Trust in UK supermarkets is at a nine-year low as grocery retailers and food manufacturers face allegations of profiteering and calls to do more to lower prices for consumers amid the cost of living crisis.
Research from consumer group Which? finds trust in supermarkets among consumers dropped to 36 in May 2023 (out of a scale of -100 to 100). This is the lowest score since November 2014. The previous high on trust was a score of 68 in May 2020, meaning trust has almost halved in around three years.
Rocketing prices and lack of access to cheaper alternatives, particularly in convenience stores, has left consumers feeling “ripped off”, according to the research, which is causing trust to drop.
Food inflation has soared to record highs over the last year as inflation forces manufacturers to put up prices. Inflation on food items did slow slightly in April to 19.1%, according to the Office for National Statistics (ONS), but it remains at near-record levels.
During the cost of living crisis, the rise in fuel poverty has been well documented as prices skyrocket. However, the research from Which? indicates almost as many UK consumers report being worried about food costs (88%) as fuel prices (89%).
Amid these concerns, consumers are looking to supermarkets to provide value for money. But these latest figures on trust from Which? suggest many feel supermarkets are not meeting their expectations.
If a retailer is not price competitive, it doesn’t take long for consumers to vote with their wallets and decide to switch to cheaper supermarkets.
Richard Lim, Retail Economics
Supermarkets have also faced allegations of “greedaltion” from some quarters by continuing to make a profit while consumers struggle with bills. Liberal Democrat leader Sir Ed Davey called for the Competition and Markets Authority (CMA) to investigate the sector last month.
As commodity price inflation begins to ease, there have also been allegations that supermarkets are not passing these savings on to their customers.
Speaking to Marketing Week, Retail Economics chief executive Richard Lim says supermarkets’ costs are extremely complex.
“There are so many different moving parts in the food supply chain, and it takes time for the benefits of falling prices to feed through to consumers,” he says.
Lim also points out that both Tesco and Sainsbury’s saw a drop in profits in their most recent financial years. He argues that supermarkets “operate on wafer-thin profits”.
The idea that supermarkets could be holding back savings or dragging their feet on implementing price cuts simply doesn’t make sense for their business model, he points out.
“If a retailer is not price competitive, it doesn’t take long for consumers to vote with their wallets and decide to switch to cheaper supermarkets,” he says.
The CMA itself has also shut down any prospect of a full investigation into the sector, stating that “global factors” have mainly driven price increases and that it “has not seen evidence pointing to specific competition concerns in the grocery sector”.
While profiteering claims against supermarkets may be difficult to prove, there is still a great deal of discussion about what can be done to bring down prices. At the end of last month, the government was examining the idea of a voluntary price cap on basic goods in supermarkets. At the time, Asda chairman Stuart Rose told Sky News that this represented “a backward idea”.
Discussions around profiteering and price caps, as well as the prices found on shelves, do seem to have damaged consumers’ perceptions of supermarkets, as seen by the nine-year low in trust found by Which?.
Rocio Concha, director of policy and advocacy at Which?, says: “While the whole food supply chain affects prices, supermarkets have the power to do more to support people who are struggling, including ensuring everyone has easy access to basic, affordable budget ranges at a store near them, including smaller stores for consumers who rely on these.”
He adds: “Supermarkets must also provide transparent pricing so people can easily work out which products offer the best value.”
Value perceptions decline
Indeed, supermarkets’ value perceptions are also in decline, with Tesco, Sainsbury’s, Asda, Morrisons, and Waitrose all perceived to represent poorer value for money compared to last year, according to figures from YouGov’s BrandIndex.
Morrisons has shown the biggest drop, with its value perception over the last year at 14.7, compared to 21.9 in the previous period. The UK’s biggest supermarket, Tesco, has also seen a statistically significant drop from 26 to 22.3 over the past year. Meanwhile, Asda’s value perception score has dropped from 27.5 5o 26.2, Sainsbury’s has fallen from 13 to 9.9 and Waitrose has declined from -10.3 to -13.2.
Out of the UK’s biggest supermarkets, only Aldi and Lidl have improved their value perceptions year over year, something which is reflected in the market share gains both have made. Aldi’s score has risen from 53 to 55, while Lidl has increased its value perception from 48.8 to 50.3.
As Lim points out, consumers’ perceptions of price are crucial to supermarkets’ driving sales.
“We’ve seen lots of retailers pivoting their proposition and their marketing message to put value at the heart,” he says, giving the example of expanded loyalty schemes.
Tesco has continued to expand its Clubcard Prices initiative this year, while Sainsbury’s and Co-op have started offering exclusive savings for members.
The research from Which? shows demand from consumers for expanded value ranges from supermarkets, with 57% of consumers stating this would help them save on their shopping.
Supermarkets have also been investing in value across their ranges. In April, Sainsbury’s said it had invested £560m into keeping prices down over two years. Meanwhile, Tesco boss Ken Murphy told investors in April that the supermarket had a “relentless focus on value”.
Perhaps unsurprisingly, given its more premium positioning, Waitrose ranks the lowest on value perceptions out of all the UK’s biggest supermarkets, according to BrandIndex. However, even as a supermarket that traditionally appeals to more affluent consumers, the supermarket has still been working hard on implementing value.
Yesterday (12 June), it announced it had cut prices on 200 of its own-brand products, with at least half being cut by as much as 10%.
Tesco’s Murphy said the supermarket would continue to be “vigilant and vigorous” on price, while Sainsbury’s CEO Simon Roberts also pledged the supermarket would continue to work on its value range and entry price points in the coming months.
While commodity prices are showing signs of coming down, it seems supermarkets will need to continue to work hard through prices and discounts to demonstrate to consumers that they can be trusted on value.