Commenting on the latest CPI Basket of Goods and Services Annual Review from the ONS, Linda Ellett, UK head of consumer markets at KPMG, said: “The changes in the ONS basket of goods and services offers up a fascinating look at how the consumer landscape is evolving. Whilst not explicitly reflective of increased spend in any particular product or service, the metric seeks to capture consumer price inflation more accurately.
“The inclusion of gluten free cereal echoes the growing prominence of health conscious consumers, as well as efforts to increase product diversification. I’m sure we’ve all walked around the supermarket to see that specialist ‘healthier’ alternatives have been given a more prominent position in recent years. Testament to the growth potential being chased by many consumer businesses and the efforts to diversify product ranges, KPMG’s own analysis revealed that that the health and wellness segment continues to outperform the wider food and drink sector, in terms of both margin and corporate deals activity.
“The balance between convenience and more eco-conscious consumption also get a look in this year. On one hand, we saw the addition of reusable bottles and mugs, reflective of consumers looking to cut down on single-use plastic. But stressing the fact that convenience is still highly prised in certain categories, we saw ‘cocktails in a can’ make it to the checkout. The pressure on consumer-businesses to offer up convenience whilst doing so in an environmentally-friendly manner will be a key playing field in the coming years. Winning businesses will be those that can find a great solution, not an uncomfortable compromise.
“In terms of technological changes, it’s unsurprising that items continue to shift quickly – such is the lifespan of tech these days. More effort has been made to capture computer games more accurately, given how volatile their pricing is. What’s more, it varies considerably across gaming platforms too, so the ONS has now defined games by platform. Not only does this illustrate how pricing around tech can be hard to pin down over time, but it’s also reflective of a wider shift within consumer markets – the move towards the platform or ecosystem mentality.
“In terms of removals, it is unsurprising to see MP4 players replaced with a more widely-defined portable music player. Today’s consumers hardly distinguish between their smart phone and a separate music player. Similarly, it was unsurprising to see shifts in what meat cuts made it into shopping baskets. Imported legs of lamb were removed to reflect low expenditure, whilst beef roasting joints were replaced with beef topside joints due to issues in distinguishing between meat cuts. This is also reflective of the fact that consumers are open to a wider variety of meat cuts, no doubt prompted by celebrity chefs. Meanwhile, the preference for locally sourced will undoubtedly have muted demand for imported items wherever possible.
“The evolution of consumer shopping habits is critical for all consumer-focussed businesses. While these changes might be more reflective of the efforts to capture inflation more accurately, they send a clear message illustrating that consumer demand and taste are what ultimately determines growth.
“Of course all of this pre-dates Covid-19, and the consumer desire to simply feed and look after the family in times of uncertainty is playing out strongly. No doubt, if the current buying trends continue, this will create a seismic shift in the next ONS Basket of Goods.”