Consumers will continue to be price-sensitive in 2009. Colruyt is tipped to win in 2009 as well. High fuel prices have little influence on choosing where to shop.

86% believe that consumer confidence will remain low in 2009, which will lead to a persistent price-sensitivity. That’s why 76% see Colruyt gaining more market share next year as well. Fewer than one respondent in three thinks that the high fuel prices are causing consumers to change their shopping behaviour to limit trips with the car.

“Even though the major food price increases are now several months behind us, the sector still expects consumers to keep a tight hand on the purse-strings,” notes Professor of Marketing, Gino Van Ossel.

These and other conclusions come from a study that Vlerick Leuven Gent Management School conducted on 21 October during the 7th Belgian Consumer Goods Conference. Via an electronic voting system, 20 propositions regarding pressing issues in the sector were presented to over 110 opinion-leaders and decision-makers from the world of Fast-Moving Consumer Goods (FMCG).

Current trends in buying behaviour to persist in 2009

72% expect the current trends in buying behaviour to continue next year. These trends can be summarised as follows[1]:

• We go shopping 4.4% more often, but we purchase 5.2% fewer products per shopping trip. “It’s true that turnover has grown due to the price increases,” Professor Van Ossel explains. “But all things considered, we’ve purchased 1.1% fewer products. Even so, that’s quite a lot better than other sectors. We still have to eat. The decline is primarily attributable to using up the stores in our cupboards. In 2009, I see the market staying rather stable or growing slightly.”
• In addition, per shopping trip, we buy 4.6% fewer different products. But in two thirds of the cases, on average, we buy more of each product per trip. “This indicates that the consumer is saving by buying volume promotions or large packagings,” says Prof. Van Ossel. This explains why 64% of the respondents believe that the consumer is more open to volume promotions.

Colruyt favoured to win

Price-sensitive consumers look for low-priced shops. That’s why 76% of the respondents think that Colruyt will continue to gain market share. Furthermore, 62% are convinced that an economic revival will not significantly reduce the market share Colruyt gains.

So, it’s not surprising that half of the respondents believe that all the discounters together can achieve 45% market share over the next 5 years.

According to Van Ossel, Colruyt was the winner during the price increases, with strong growth in each store. “People are making large shopping trips less often, but when they do they’re going more and more frequently to Colruyt. Which also accounts for the trend towards larger packagings and volume promotions, which are quite typical for Colruyt. It’s the chicken-and-egg phenomenon.”

No cause for pessimism at Delhaize and Carrefour?

And yet, the sector is relatively optimistic about the prospects for the non-discounters. Barely one in four believes that they can merely try to limit the damage in these economically difficult times. That’s why only one third of the respondents think that Delhaize will lose market share in 2009.

Still, 78% do believe that the non-discounters must be very careful in their communications about prices and discounts − if not, they risk putting the issue of price even higher on the consumer’s agenda.

“Price is clearly not only making savings,” adds Prof. Van Ossel. “So, it’s striking that last year as well the − still somewhat more expensive − neighbourhood supermarkets saw their market share increase. That fits in, of course, with the trend towards more but smaller shopping trips.”

Also notable is that only 33% of the respondents think that, due to the high fuel prices, consumers are modifying their shopping behaviour to economise on trips with the car. The respondents clearly believe that consumers want to shop close to home mainly for the convenience and to save time.

The respondents see nice opportunities in store for Carrefour too. Half of those polled see Carrefour substantially re-positioning the hypermarkets so that they can be successful again. And even if the hypermarkets would remain a source of concern, more respondents still see Carrefour staying instead of leaving. Incidentally, CEO Marc Oursin has once again confirmed that leaving Belgium is absolutely out of the question for Carrefour.

The job market remains tight

In the face of the growth recession, the job market remains relatively tight. Barely 7% of the respondents think it’s easier to find the right personnel today. Only 32% see the sector becoming more attractive as an employer because of the financial crisis.

Professor of Human Resource Management, Dirk Buyens, is not surprised: “Even if more people are looking for work due to the growth slow-down, changing over to another sector is not so easy to do.”

Only 38% think that employees’ confidence in employers is at an historic low point due to the current economic malaise.

Global warming still a consideration for the logistics chain

54% of the respondents are convinced that the sector will produce and purchase more locally in the future. The reason: the high cost of fuel and the rising pressure to reduce CO2 emissions.

“Some might think this percentage is rather low,” comments Professor of Operations Management, Ann Vereecke − “but you mustn’t forget that many companies here have been working on this issue for some time now. For them, it isn’t a future trend but today’s reality.”

Keep on consuming!

“Keep on consuming” was the clear message during the concluding CEO debate, with the CEOs of Carrefour, Colruyt, Delhaize, Inbev and Unilever (among others). Now that the price increases are behind us and inflation has dropped noticeably, ‘buying power’ cannot be a valid reason to stop consuming.

With their call for continued consumption, the CEOs clearly want to do their part to try to combat the economic slow-down.

[1] These trends were reported during the conference by GfK Panel Services Benelux. They cover the period of the large price increases: July 2007 – June 2008.

For more information, please contact: Prof. Gino Van Ossel Mobile: 0477/40.27.56 E-mail: gino.vanossel@vlerick.be You can find the complete research here (pdf, 182 kB).