As the cost of groceries soars, households are looking to cut costs anywhere they can. Annual shopping bills are predicted to rise by £380 this year – an increase that millions of households will struggle to absorb.
The discounters – the likes of Poundland, Poundstretcher, B&M, Home Bargains, Iceland, OneBelow, Savers, Aldi and Lidl – made their name in the financial crisis of 2008 by offering shoppers everyday items at rock-bottom prices. So are they coming to the rescue of shoppers this time around?
Last week, The Mail on Sunday went to the country’s major discounters and compared the prices of a range of everyday branded goods at each store with those at Britain’s most popular supermarket, Tesco. We analysed prices of 70 popular food, toiletry and household items at nine discount stores in London and Essex.
Don’t crack up: As prices rocket households are looking to cut costs anywhere they can
We only price compared branded items, such as Walkers, McVitie’s and Nivea, so we were comparing like-for-like. But it is worth noting that prices on lesser-known and own-brand items can be even cheaper. Aldi and Lidl, in particular, offer the best deals on their own-brand products.
Comparing prices can really only be done by visiting individual stores as we did last week: many discount retailers including Poundland, Poundstretcher and B&M have limited websites. Where packet sizes differed between retailers we compared prices by weight.
What we found was a mixed bag. While shelves were labelled with what looked like big savings, in some cases prices were the same as at Tesco. In three cases, Tesco offered the best price we could find, and no one store was consistently cheaper than Tesco.
For example, a 630g jar of Nutella was offered at an impressive-sounding £4 at Poundland. But the same jar can be found at Tesco for £3.65 (thanks to an Aldi price match). In fact, we found Tesco’s Aldi price match promise was keeping prices down on a number of products, including Tetley Tea, Pringles and Warburtons crumpets.
Similarly, a packet of honey and lemon Strepsils for £1 may seem like a good deal from Home Bargains. But its packets contain just eight lozenges, while Tesco charges £3.25 for 36, equal to 72p for eight.
No discount retailer was consistently cheaper than the rest – even Aldi and Lidl were not always the best value. For example, Heinz Ketchup was cheaper by weight at Iceland, Poundland and B&M.
But on the whole savvy shoppers can make serious savings on their shopping by buying some everyday items from discount stores – if they don’t assume they will always provide the best value. For example, a big packet of Cathedral City extra mature cheddar costs £5.25 at Tesco – but just £3.69 at Home Bargains.
A five-pack of Tangy Cheese Doritos costs £1.65 at Tesco, but £1.25 at OneBelow, while a 500ml bottle of Coca-Cola is £1.65 at Tesco and £1.39 at B&M. These savings may be a few pence, but over a year can add up to a decent reduction.
One thing that stood out as I visited the discount stores is that they had some extraordinary deals on one-off items. For example, at Poundshop, there were flipflops and reading glasses for £1. When I went to B&M there were solid wood garden benches for £60, which you would struggle to buy elsewhere for less than £100.
Will the discounters keep their prices low?
Grocery prices are rising across the board – the soaring cost of food is one of the main drivers of inflation, which hit 9.1 per cent last month. However, the discount stores are predicted to rise to the challenge and offer some of the cheapest prices on the high street.
Richard Hyman is a partner at the retail consultancy company TPC. He says: ‘When you pin your colours to a mast, like low prices, you must deliver the promise or the rug will soon be pulled from under your feet.
‘If you’re saying our prices are better than others on the high street, that is what shoppers must find when visiting your stores.’
Hyman adds that there is particular pressure on discounters to deliver, because they specialise in what the retail industry terms ‘known value items.’
These are products, such as toiletries and cupboard staples that households tend to replace and replenish so frequently that they have a very good idea of how much they cost.
Customers know whether or not they’re getting good prices, so the discounters must offer the cheapest prices to entice them.
The discounters could really come into their own at times of celebration, such as Christmas, predicts Nisa Bayindir, a consumer psychologist and behavioural scientist.
She says: ‘At difficult times, people adapt to living frugally day-today. But on special occasions, we often look to buy and do things as we used to in easier times to give ourselves a sense of normality and a more even keel.’
She adds: ‘So, if we are in a full-blown recession at Christmas, I would expect shoppers would look to buy treats, but at the lowest price they can find.
‘The discounters should benefit in this environment.’
Can you rely on cheap stores for main items?
Clare Bailey is a retail expert and author of the book The Retail Champion – Ten Steps To Retail Success. She says: ‘Discounters will often buy a limited amount of stock from a source that needs to clear it.
‘Items bought at these shops may have a shorter shelf life than at a traditional supermarket. But if you’re buying a packet of biscuits, they are unlikely to be hanging around very long in the average family home anyway.’
She adds: ‘It is not possible for discount stores to sell full ranges online. The selection changes so quickly that it would not be viable.
‘Even in store, ranges change from week to week so shoppers cannot bank on being able to buy a certain item at any one time.’
Who are they targeting in cost-of-living crisis?
Bailey believes that during the 2008 financial crisis, when the discounters rose to prominence, they were targeting people on low incomes who had to make every penny count. Today, the picture is quite different – even people who are perfectly able to pay full whack are using the discount retailers to find bargains when they go shopping.
‘As consumers, we have a very different attitude today,’ she says.
‘It’s like a reverse snobbery, where it’s now cool to be thrifty and good not to be seen as wasteful – from an environmental aspect but similarly with money.’
Bayindir adds: ‘I think the stigma is switching from being frugal to being taken for a fool. People are taking pride in pointing out the deals and bargains they find.’
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