Price and Value Study

September 2009

With the current economic climate, Price is becoming an increasingly significant factor in all sectors including food and drink.

Bord Bia’s “Feeling the Pinch” study in January 2009 found almost 9 in 10 consumers agreed that they pay more attention to grocery prices in that last 6 months than previously note (increase of 9%).

In this study almost 9 in 10 claim to be shopping around for value more than before

In light of these findings, Bord Bia commissioned this study in order to understand consumer and shopper attitudes to price and promotions to assist clients and help them compete more effectively.

Context and Background

We surveyed a total of n=1,810 main household grocery shoppers, online, in the Republic of Ireland

The sample was representative in terms of sex, age, social class and region.

Methodology

The Interview length was between 15 and 20 minutes

The fieldwork was conducted between 3rd and 12th August 2009

MARKET UNDERSTANDING

Attitude To Shopping – Value (Base: All Main Grocery Shoppers, n= 1,810)

StronglyDisagree

Value Orientated Statements

SomewhatDisagree

SomewhatAgree

StronglyAgree

I regularly purchase brands onpromotion as part of my

grocery shop

I tend to shop around forvalue more than I used to

for groceries

I generally shop aroundfor best deals when it comes

to grocery shopping

I often choose which store to do mygrocery shop in on the basis of value

for money

Value is the main reason I tend toShop where I shop

Value-oriented statements attract significant levels of endorsement in the current climate.

Clearbehavioural

shift

(Q2)

Attitudes To Shopping – Quality(Base: All Main Grocery Shoppers, n= 1,810)

StronglyDisagree

Quality Orientated Statements

SomewhatDisagree

SomewhatAgree

StronglyAgree

Having a wide range or selectionof items is the main reason

I choose store for grocery shopping

The quality of the items I buy ismore important to me than

the price I pay for them

I tend to choose products thatare healthy for me and my

family regardless of cost

I prefer to purchase brandI know rather than

looking for best price

I tend to choose the storethat is closer to me

for my grocery shop

Few can categorically dismiss price as a factor in

decision making

In relative terms quality orientated statements attract lower levels of endorsement than value statements.

(Q2)

Attitudes To Shopping - Budget(Base: All Main Grocery Shoppers, n= 1,810)

StronglyDisagree

Budgeting Statements

SomewhatDisagree

SomewhatAgree

StronglyAgree

I often spend more than I hadplanned to when grocery shopping

I have a set budget for my groceryshop and stick to it

… strict adherence to a budget is not the norm as yet, but would be intriguing to see how this behaviour develops over time …

SHOPPER SEGMENTATION

Attitudinal Segmentation Process

Factor Analysis Segmentation

Factor 1=Value Based-Shop around for best deals

- Regularly purchase brands on promotion-Shop for value more than I used to- Value is main reason where I shop

- Often choose store to shop on basis of value for money

-I have a set budget for my grocery shop and stick to it

Factor 2=Brand Based-Prefer to purchase brands I know

- Tend to choose the store that is closest to me

-Quality of items I purchase is more important than the price I pay

-I tend to choose products that are healthy for me and my family regardless

of price-Often spend more than I had planned to

when grocery shopping

Factor analysis performed to establish core themes emerging within respondents answering patterns to attitudinal statements. Two distinct

themes emerge (value and brand).

Clu

ster

An

alysis

1. Indulgers

2. Compromisers

3. Strugglers

4. Value Hunters

The defined factors (value & brand) then were fed into a cluster analysis process where 4

distinct attitudinal segments emerged.

Attitudinal Statements

Penetration Of Attitudinal Segments(Base: All Main Grocery Shoppers, n= 1,810)

20%

Indulgers

28%

Compromisers 27%

Strugglers

25%

Value hunters

QualityOriented

ValueOriented

Consumers defined by their relative emphasis on quality vs value …..

(431,730)

(604,432)(582,836)

(539,663)

( ) Population Number from CSO Estimates 2009

Most/Least Likely To Say By Segment

Indulgers

• Most likely to say:– I prefer to purchase brands I know rather

than looking for best value.– The quality of items I purchase in more

important than the price I pay.– I tend to choose product that are healthy

for me regardless of cost.

• Least likely to say– Value is the main reason I choose to shop

where I shop.– I often choose which store to conduct my

grocery shop on the basis of value for money.

– I generally shop around for the best deals when it comes to grocery shopping.

– I have a set budget for my grocery shop and stick to it

28%Compromisers

• Most likely to say:– I prefer to purchase brands I know rather

than looking for best price.– I tend to shop around for value more than I

used to for groceries.– The quality of items I purchase in more

important than the price I pay.– I regularly purchase brands on promotion as

part of my grocery shop.

• Least likely to say– Value is the main reason I choose to shop

where I shop.– I have a set budget for my grocery shop and

stick to it

While both groups have a degree of quality orientation, Compromisers are changing their behaviour to find value more than they did previously and are influenced more by promotions

25%

Value Hunters

• Most likely to say:– Value is the main reason I choose to shop

where I shop.– I generally shop around for the best deals

when it comes to my grocery shopping.– I often choose which store to conduct my

grocery shop on the basis of value for money.

• Least likely to say– The quality of items I purchase is more

important to me than the price I pay for them.

– I tend to choose the store that is closest to me for my grocery shop.

– I prefer to purchase brands I know rather than looking for the best price.

Most/Least Likely To Say By Segment

Strugglers

• Most likely to say:– I tend to shop around for value more than I

used to for groceries.– I generally shop around for best deals when it

comes to grocery shopping.– I regularly purchase brands on promotion as

part of my grocery shop.

• Least likely to say– I tend to purchase brands I know rather than

looking for best price.– I tend to choose the store that is closest to

me for my grocery shop.– I often spend more than I had planned to

when grocery shopping

Strugglers are certainly value-conscious, and they actively seek VFM but stop short of claiming it is the main reason they choose where to shop.

Quality Orientated Statements By Segment(Base: All Main Grocery Shoppers, n= 1,810)

Quality Orientated Statements

Having a wide range or selection of items is themain reason I choose store for grocery shopping

The quality of the items I have is moreimportant to me than the price I pay for them

I tend to choose products that are healthyfor me and my family regardless of cost

I prefer to purchase brand I know rather thanlooking for best price

I tend to choose the store that is closer to mefor my grocery shop

Based On Strongly Agree

Budget Orientated Statements

I often spend more than I hadplanned to when grocery shopping

I have a set budget for my groceryshop and stick to it

Indulgers Compromisers StrugglersValue

Hunters

139 118 100 53

217 125 58 21

216 137 63 16

250 128 50 17

233 133 50 11

134 107 83 79

71 88 106 129

Index vs. Total (Total = 100)

Indulgers are evidently less price-conscious with a significantly greater emphasis on quality over value…

Value Orientated Statements By Segment(Base: All Main Grocery Shoppers, n= 1,810)

Value Orientated Statements

I regularly purchase brand onpromotion as part of my

grocery shop

I tend to shop around forvalue more than I used to

for groceries

I generally shop aroundfor best deals when it comes

to grocery shopping

I often choose which store to do mygrocery shop in on the basis of value

for money

Value is the main reason I tend toShop where I shop

Based On Strongly Agree Indulgers Compromisers Strugglers

Value Hunters

60 91 110 113

32 85 119 146

34 74 125 157

22 66 120 172

26 72 113 178

As the name suggests, Value Hunters place singular emphasis on the quest for value – a stark contrast with Indulgers

Index vs. Total (Total = 100)

Segmentation Profile - I(Base: All Main Grocery Shoppers, n= 1,810)

Total Sample

Male

Female

18-24

25-34

35-44

45+

Yes

No

Young & Single

Early Settlers

Mid Age, no kids

Empty Nesters

Young families

Mature families

Gender

Age

Dep Kids

Lifestage

Indulgers Compromisers Strugglers Value Hunters

109 107 91 98

93 94 107 102

89 100 89 122

100 100 103 100

90 93 103 107

118 107 96 86

72 95 110 115

118 103 93 90

115 115 85 85

94 88 106 100

119 113 94 94

147 100 87 87

79 89 105 116

70 100 115 115

Value seeking and family commitments go hand in hand!

Index vs. Total (Total = 100)

Main Grocery Shop Outlet by Segments(Base: All Main Grocery Shoppers, n= 1,810)

Total Sample

Tesco

Dunnes Stores

Lidl

SuperValu

Aldi

SuperQuinn

Convenience

Indulgers Compromisers Strugglers Value Hunters

88 107 95 100

110 110 105 76

50 67 125 142

136 109 91 64

29 43 114 200

200 125 50 25

300 200 100 0

Average number of storesshopped in regularly for groceries

2.8 3.1 3.3 3.6

Value chasers over index on discounters, but also shop across a broader repertoire of stores.

Index vs. Total (Total = 100)

• John is 55 years old and lives in Clontarf. He is married to Elaine and they have two children, Brian and Emma. Brian is 26 and has just started working for a Bank in the city centre. Emma is 24 and is currently doing her masters in UCD. Both Brian and Emma have their own places in town, but loving coming home every couple of weekends for a home cooked meal and a “catch-up”.

• John is a senior manager in an Insurance company in the city centre and drives his Saab 93 to work every morning. He enjoys playing golf with his friends on Saturdays, and usually eats out with his wife and friends on a Saturday night. He plans to retire in 5 years, and has invested his money wisely despite the recent economic problems.

• Elaine generally does the main grocery shopping in Superquinn on a Sunday afternoon, and John often gets requests from Elaine to pick up certain things from Marks & Spencer’s in the city during the week. John also finds himself regularly having to nip out to the local Spar in the evening time to pick up extras, and his local off license for a bottle of wine.

• John always purchases the brands he knows and likes. He does not have time for looking for the best deal, especially as he is generally just shopping for himself and Elaine. He has however become more aware of the healthier options available to him, but would only ever look for these alternatives within brands that he knows and trusts.

Pen Portrait - Indulger

• Sean is 30 years old and is a primary school teacher in Galway. He recently bought a new apartment, where he lives and rents the spare bedroom to a friend of his. He is currently single, but has been seeing Jane on and off for a while.

• Sean likes socialising with his friends at the weekend, and plays football on a Wednesday night with the lads to keep fit and enjoy the craic. He does however notice the few Euro less in his account every month since the introduction of the pension levy. He still has enough money to pay his mortgage and go out at least one night every weekend, but he is having to face up to the reality and consequent fears of the downturn.

• He is not in the eye of the economic storm, but the carefree consumerism that he enjoyed in recent years is being replaced by a certain degree of conservatism and financial prudence. He now feels obliged to cut back for fear of what might happen in the future. He realises for the first time that nothing is certain.

• Sean generally shops in Dunnes Stores, but he has noticed that the new Tesco in town does some great offers on meat and beer. He also tends to make about one trip a month to Aldi, where he tends to purchase some specialiity cheeses, foreign beer, washing powder in bulk, detergents and have a look at the special items they have on sale.

• Sean is swayed by promotions on brands that he likes. He generally does not use all the food he buys on promotion and has to throw it out when it passed the best before date.

Pen Portrait - Compromiser

• Marie is 35 years old and is a housewife from Monaghan. She is married to Barry, who works in a local factory. Barry recently had to take a 20% cut in salary, but avoided being made redundant; a number of his colleagues were let go.

• Marie and Barry have 3 young children, aged 6, 3 and 2. Marie has contemplated looking for some part time work to help out, but there is very little out there at the moment and the cost of child care means there is little point in pursuing this at the moment. She has certainly noticed how much more difficult it is to make ends meet, and had to cancel their summer holiday earlier this year.

• Marie shops mainly in Tesco nowadays, given the money she can save with the new ‘change for good’ campaign. She saves almost €50 on her weekly shop now compared to what she used to pay in Superquinn. She visits Lidl on a regular basis as she finds it great to stock up on a number of items for the kids, as well as washing powder and some toiletries. She finds it hard now to justify shopping in Superquinn except for special occasions.

• Marie is fearful for the future of her family, and doesn’t know what would happen if Barry lost his job. She sticks very closely to her shopping list and would rarely go over budget unless there was a promotion on something like meat, tea or nappies, something that will be used up in the future.

Pen Portrait - Struggler

• Siobhán is 42 years old and is from Limerick. She is married to Jim who is a self employed joiner but is struggling to get consistent work at the moment; it’s mainly cash in hand. They have 4 children, aged 16, 11, 8 and 4.

• Siobhán always seems to struggle paying the bills, even in the “good times”, but this is especially the case at the moment as Jim tries to look for something more consistent. She is fearful for the future given the amount of negative media out there about the future of the construction industry. She found it hard to fork out for new school books for her children recently. Life is a financial struggle and money influences decision making in every aspect of life.

• She has started going back to Tesco since she heard from friends about the savings they made, but she shops in other places also. She tends to do 1 grocery shop per week, generally on a Saturday morning when Jim looks after the kids. She goes to Tesco, then Lidl to stock up on the household goods she needs. She also goes to Dunnes Stores when they advertise special offers that are relevant to her. Shopping around for the best deals is a constant theme.

• Siobhán is long since converted to purchasing mainly private label groceries and has always felt the Tesco and Dunnes Stores own label goods are the same as any others. She is very good at sticking to her shopping budget and always knows exactly where she will get the best value for the groceries she needs.

Pen Portrait – Value Hunter

Purchase Frequency For Main Food Categories(Base: All Main Grocery Shoppers, n= 1,810)

Bread WaterCheddarCheese

FrozenChicken

TeaBags

Boxes ofChocolates

FrozenBeef

Burgers

More than once a week 61% 17% 10% 8% 3% 2% 2%

Once a week 29% 24% 47% 22% 18% 3% 13%

Once every 2 weeks 5% 13% 24% 16% 24% 4% 12%

Once a month 2% 11% 9% 14% 28% 11% 16%

Every 2-3 months 1% 8% 4% 12% 16% 22% 13%

Every 6 months 0% 6% 2% 6% 5% 23% 9%

Once a year 0% 2% 0% 4% 2% 21% 5%

Less than once a year 0% 3% 0% 4% 1% 9% 6%

Never 1% 16% 3% 14% 3% 5% 24%

AVERAGE PER MONTH 6.2 2.7 3.3 2.1 1.8 0.6 1.2

Of the categories researched, not surprisingly Bread has the highest purchase frequency per month, with Boxed Chocolates the lowest

Average Times Per Month Main Categories Purchased In Multiples(Base: All Main Grocery Shoppers, n= 1,810)

Total Sample

Bread

Cheddar Cheese

Water

Frozen Chicken

Tea Bags

Frozen Beef Burgers

Box Of Chocolates

Indulgers Compromisers Strugglers Value Hunters

94 98 103 104

88 101 104 104

100 106 96 98

94 96 96 114

97 105 100 97

86 100 98 113

127 121 88 68

Average Times PurchasedPer Month

Interestingly there are no significant differences in monthly purchase frequency across the segments for the categories of interest, with the exception being Boxed Chocolates for

Indulgers and Compromisers, and Frozen Chicken and Burgers for Value Hunters

Index vs. Total (Total = 100)

Category Purchase Tendency Towards Private Labeland Branded Items(Base: All Main Grocery Shoppers, n= 1,810)

Tend to buyPrivate Label

(1-3) (4-7)

Tend to buyBranded

(8-10)

Tea (n=530)

Boxed Chocolates (n=561)

Bread (n=605)

Cheese (n=603)

Frozen Meat (n=602)

Water (n=573)

Tea, Chocolate and Bread show strong tendencies towards branded purchases, while water is the most prevalent private label purchase

On a 10 point scale, where do you belong in terms of your purchasing of <category> for your household?

Branded Purchase For Categories By Segment(Base: All Scoring 8-10 (branded) in terms of Private Label vs. Branded purchasing)

Bread

Water

Chocolate

Tea

Frozen Meat

Cheese

Branded Incidence Total(Base on Score 8-10 from Q1a)

There is a strong over index for Indulgers and to an extent Compromisers among general ‘Branded’ grocery shoppers

Indulgers Compromisers Strugglers Value Hunters

133 120 88 69

148 114 76 67

117 103 98 97

121 126 82 84

114 106 79 86

142 130 85 55

Index vs. Total (Total = 100)

Private Label Purchase For Categories By Segment

Bread

Water

Chocolate

Tea

Frozen Meat

Cheese

Private Label Incidence Total

(Base on Score 1-3 from Q1a) Indulgers Compromisers Strugglers Value Hunters

70 70 85 175

39 65 113 157

111 78 111 122

94 63 106 138

56 78 89 167

66 71 111 149

(Base: All Scoring 1-3 (Private Label) in terms of Private Label vs. Branded purchasing)

Unsurprisingly, strong over index across all categories for Value Hunters among general ‘Private Label’ purchasers

Index vs. Total (Total = 100)

Category Purchase Routine Vs Experimentation(Base: All Main Grocery Shoppers, n= 1,810)

Tend to buy same…(1-3) (4-7)

Experimenter…(8-10)

Tea (n=530)

Boxed Chocolates (n=561)

Bread (n=605)

Cheese (n=603)

Frozen Meat (n=602)

Water (n=573)

On a 10 point scale, where do you belong in terms of your purchasing of <category> for your household?

Both tea and water show a stronger degree of loyalty towards the same brand relative to the other categories.