Food prices are rising, according to the BRC. Retailers need to treat shoppers like adults and tell them so.
The BRC’s latest data on shop prices has confirmed what many have been seeing at the shelf edge for a month or two at least: food price deflation is well and truly over and we’d better get used to paying more for our groceries or, alternatively, get used to seeing pack sizes hurtle towards Lilliputian proportions.
As the BRC quaintly puts it, the supermarkets have hitherto been effective at shielding consumers from cost increases.
Another way of looking at it is that the supermarkets have been effective at telling suppliers to go away when presented with higher invoices.
Either way you want to look at it, the industry will have an interesting challenge this year in terms of how it chooses to communicate price increases, if at all.
Punters aren’t thick. They watch the news and read the papers and are cognisant of the fact that manifold pressures (Brexit, the pound, the weather, input cost inflation, the vagaries of global commodity markets) are combining to hike the cost of the weekly shop.
I think, as grown adults, they are capable of processing this fact, and would appreciate some open and honest communication from retailers and suppliers alike: “we are sorry, but because of X, Y and Z, we are increasing prices by this much.” Not that tricky really, is it?
What irks shoppers more is that increasingly unconvincing and patronising ‘shrinkflation’.
I believe that most shoppers would rather see prices hiked than be subjected to the ‘let’s hope no-one notices’ strategy of slashing pack sizes or including less product in the same packaging.
What would have been more damaging? Mondelez openly saying that Toblerone would be more expensive? Or Mondelez being hauled over the coals for pulling a fast one by desecrating the design of one of their flagship brands?
I suspect I know the answer.
What will be equally fascinating is the coping mechanisms that shoppers might put in place in the face of escalating grocery bills.
In similar situations in the past, we’ve seen shoppers migrate to discounters, increase their participation in private label and drift into smaller pack sizes to avoid tying up disposable income in household inventory.
The discounters will be engaged in moderate anticipatory hand-rubbing at the thought of supermarkets finally passing cost increases through, while the supermarkets themselves will have to weigh up what should bear the brunt of inflation – suppliers, shoppers or their already creaking margins.
In the meantime, if anyone needs me, I’ll be down the allotment.