chief executive of Asda talks about consumers shopping habits

Recession is changing consumer s' shopping habits

11:07am Friday 19th December 2008

Comments (0) Have your say »

THE president and chief executive of Asda has predicted the recession will fundamentally change consumer behaviour.

Andy Bond warned that retailers who fail to adapt to the new reality will not survive.

Addressing an Asda seminar in London he said: "We can already see how changing attitudes are affecting customers' shopping habits.

"Consumers are not prepared to pay a premium when they cannot taste the difference. The era of conspicuous consumption is over. Saving money by cutting out waste of all kinds will be the priority.

"I don't see this as being a short-term response to the recession but a fundamental shift that will see the emergence of a new breed of customer."

He believes the new consumer will demand more value for money than ever before and genuine price transparency.

"Retailers will have to respond by adapting their business models if they are to survive," said Mr Bond.

"Retailers with authentic low cost operating models, who embrace sustainability as a means of reducing costs and who are transparent about how they pass savings on to their customers will be the winners.

"Those who continue with high/low pricing will become increasingly distrusted."

He warned politicians that regulation was the enemy of low cost retailing.

"Government needs to stimulate competition by carrying through the proposed reforms to the planning system and at the same time resist the temptation to bind retailers in red tape, codes of practice and ombudsmen," he said.

Douglas McWilliams, chief executive of the Centre for Economics and Business Research (Cebr), said UK households would become increasingly thrifty.

"The stark economic realities we now face will encourage saving not spending," he said.

A raft of facts and figures were given showing how people are cutting back on spending where they have alternatives.

They included a 39pc drop in visits to hairdressers and 27pc rise in sales of hair colour; still water sales down 15pc; ready meal sales significantly down but sales of core ingredients up 43pc.

Steps to reduce waste are becoming the norm with 69pc freezing more things, 40pc no longer throwing away leftovers and 31pc washing clothes less often.

Customers are also more careful when buying 40pc look for the longest date codes and 38pc buy less perishable food.

But customers will still pay extra where they see a real benefit smoked salmon sales are up 17pc, balsamic vinegar up 70pc, olive oil up 19pc.

Ethics are also still important with sales of barn eggs down 22pc, caged eggs down 5pc but free range eggs up 8pc.

ends