THE DEVELOPING CONCEPT OF VALUE - Issue 12
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IDENTICA INSIGHT THE DEVELOPING CONCEPT OF VALUE Issue 12
Issue 12 2
THE DEVELOPING CONCEPT OF VALUE
AN ECONOMIC
PRESSURECOOKER
Continued downward pressure on average Average Monthly
weekly disposable income in the UK is Household Disposal
expected to become a feature of life. Slow Income
recovery and rising fuel, housing, and food 2010
costs will mean that average weekly disposable
household income in the UK is likely to remain
static for the foreseeable future.
£578.40
2020
It’s hardly a surprise then that consumers are
searching far and wide for ways to make their
money go further.
£566.90
2030
Retailers have recognised growth in value
markets and are starting to heavily invest.
Shopping habits have dramatically altered
£589.50
after the economic quagmire and some of
those habits are here to stay.
This week’s Identica Insight re-aligns the
ever changing perception of value and maps
its presence within our culture.
© Copyright Identica Limited 2013
Issue 12 3
THE DEVELOPING CONCEPT OF VALUE
THE RISE OF THE
DISCOUNTERS
Discount grocery retail continues to surge WHAT CHANNELS MAKE
ahead encouraging shoppers from across the UP THE UK GROCERY MARKET?
social spectrum to venture in, so says a recent
report from specialist wholesaler Rowan and
IGD. This research indicates that the food
discounters will see their share of revenue Other Retailers
Online £9.2BN
double over the next five years. £6.5BN
Poundland’s pre-tax profits have tripled since Discounters
2008 while other high street retailers have £9.5BN
been squeezed. Similarly, B&M Bargains’
pre-tax profit rose from £10m in 2008 to
£90.6m in 2012. Staggering.
This incredible growth highlights the Hypermarkets &
consumers’ perception of value retailers, and Superstores
£74.1BN
landlords are similarly positive, seeing them
as footfall drivers. Poundland currently have Convenience
Stores
458 shops across the country but they have £35.6BN
recently released plans to double that number.
Consumer spend in
UK Discounters
2013 2018
£9.5 BN £18.6 BN Small Supermarkets
£34.9BN
© Copyright Identica Limited 2013
Issue 12 4
THE DEVELOPING CONCEPT OF VALUE
VALUE BEYOND PRICE
The OED defines ‘value’ as the regard that
something is held to deserve; the importance,
worth, or usefulness of something.
This broader concept of value is reflected in
other ways in which consumers are looking
to make their £’s go further – revealing some
interesting lessons for brand owners and
branded businesses.
Interestingly, we’re seeing consumers
use discount retailers tactically. People are
choosing to purchase a few products such
as healthcare or dental in pound stores.
Similarly we’re seeing the same thing
happen across fashion retail. Primark has
seen unparalleled amounts of growth over
the past five years. Customers are trading
down on basics and staying there - and seem
completely happy to mix and match between
brands and retail offers. Indeed for many
this is the smart thing to do.
© Copyright Identica Limited 2013
Issue 12 5
THE DEVELOPING CONCEPT OF VALUE
OWN-BRAND
Shoppers have been turning to own-brand
products since our economic dive in 2007 as a
measure of cost-saving. In fact, between 2007
and 2011 own-brand sales rocketed 51.7%
according to Key Note research.
The big four grocers have invested heavily
with Tesco now having three full ranges of
own-brand, Finest, Value and Everyday Value.
And why not when Sainsbury’s had revealed
that its own-brand ranges are continuing to
grow twice as quickly as branded goods.
One significant reason for the explosion in
growth has been an investment by retailers in
the premiumisation of their own value ranges.
This measure would have made the trade
down for many consumers more appealing.
As large retailers and grocers have
successfully normalised their value products,
they can confidently move into other markets.
Tesco has recently launched it’s very own
budget tablet called the Hudl.
It isn’t just the grocers benefiting from
consumers trading down however, House
of Fraser has seen their own-brand profits
rise by 18%.
© Copyright Identica Limited 2013
Issue 12 6
THE DEVELOPING CONCEPT OF VALUE
VALUE VOUCHERS
A shopping habit that defined 1970’s shopping
has returned. Vouchers are back and obtaining
them, whether physical or digital, has become
something that is seen by consumers as
“intelligent” rather than ashamedly thrifty.
“If you pay full price at Pizza Express
or GBK then you’ve made a mistake.
You can simply download a voucher
from their free wifi.”
Catherine Shuttleworth, Savvy Marketing
Vouchercloud has both cultivated and
benefited from this positive association with
vouchers. The company which started in 2010,
has saved UK consumers around £90 million
on everything from dining out and shopping,
to cinema tickets and hotel bookings.
The application has received over 4 million
downloads; that’s around 13% of all UK
smartphone owners.
© Copyright Identica Limited 2013
Issue 12 7
THE DEVELOPING CONCEPT OF VALUE
COLLABORATIVE
CONSUMPTION
These systems of organized sharing, bartering, As an alternative to traditional forms of Services such as Task Rabbit, which allows you
lending, trading, renting, gifting, and buying and ownership, made increasingly to post a task to a community portal and pay for
swapping are now much more mainstream. viable through digital technologies, we somebody to complete that task are becoming
expect these systems to grow strongly. popular. Peer-to-peer lending and crowd-sourced
In a world where people are cash strapped, funding are a viable way for people to access
collaborative consumption gives people the Big brands hoping this is a passing phase may credit. That credit is usually invested into the
benefits of ownership with reduced personal be in for a nasty surprise. The value of the local community.
burden and cost and, in some instances, market in sharing goods and services has been
lower environmental impact too. put at £310bn and shows no sign of abating.
Help out a neighbour with.... An online sharing community... Rent your textbooks with...
Peer-to-peer loan lending with.... Let spare rooms to tourists with.... Lend idle tools with....
© Copyright Identica Limited 2013
Issue 12 8
THE DEVELOPING CONCEPT OF VALUE
STYLISH VALUE
We Hostel bills itself as the first design
hostel in São Paulo. Architect Felipe Hess
and partner Guilherme Perez chose a white
mansion from the early 1900s with period
details including stained glass and
crown mouldings.
The interior features white walls and
stained wooden floors as a backdrop for
restored furniture, gathered from the city’s
flea markets. The overall effect is equal parts
turn-of the-century classic, mid-century cool
and contemporary industrial chic. Shared
dormitories are priced at about £20
($32, €24) per night.
Consumers want to be congratulated not
punished for buying into value offers. Ikea
understands that value products don’t need
to be presented in a utilitarian way, and that
simple but stylish presentation can enhance
the perceived value of what is fundamentally
a value proposition.
Harry’s was created in respect of quality
craftsmanship, simple design, modern
convenience and most importantly for
men who know they shouldn’t have to
overpay for a great shave.
© Copyright Identica Limited 2013
Issue 12 9
THE DEVELOPING CONCEPT OF VALUE
A SEA CHANGE
James Russell, commercial director of Rowan,
says: “The discount channel is booming and is
increasingly significant. However, rather than
being a short-term trend in the retail sector,
it’s actually a long-term cultural shift. What I
believe we are seeing is a permanent change
in the way the UK shops.”
In addition to discounters attracting in
better off shoppers hungry for bargains,
IGD research indicates that a high proportion
of shoppers continue using discounters even
after their personal financial circumstances
have improved.
This would suggest that, even though the
current boom in discounters has been fuelled
by the economic downturn, the sector should
continue to thrive even after the pace of
recovery quickens.
Value is here to stay but is reinventing itself
to meet the challenges of the modern world.
Retailers and brand owners alike need to
re-think their concept of value and how it
is presented – certainly looking beyond
mere price – and in particular rewarding
shoppers emotionally and practically for
their canny purchasing.
© Copyright Identica Limited 2013
THANK YOU
FOR YOUR TIME
For further information please contact:
LEAH.WILLIAMS@IDENTICA.COM
+44 (0) 20 3451 9717
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