Exclusive survey: 75% of consumers believe supermarkets profiteering amid high inflation

Following representatives of the traditional big four supermarkets being hauled in front of the Commons business select committee to be grilled about the rising prices of food and fuel, new data produced for Retail Week by Walnut Unlimited shows customers are increasingly demanding answers too.

Of 2,001 respondents surveyed, 75% said they strongly agreed that supermarkets have been profiteering during this period of high inflation – compared with just 70% for banks and not far behind the 81% for electricity companies. 

This will make for stark reading for supermarkets, who have all rightly pointed to the percentage of profits falling year on year in the last 12 months.

Tesco commercial director Gordon Gafa told the committee the UK’s largest retailer is the “most competitive we have ever been” on price right now – a sentiment shared by Sainsbury’s, Asda and Morrisons.

While the grocers’ balance sheets might tell that story, our survey suggests they are not doing a good enough job in communicating this value perception point to their customers – particularly older shoppers.

The data found that 84% of 45 to 75-year-olds agree supermarkets are profiteering, compared with 69% across other age ranges.

The findings also show that those in lower socioeconomic classes agree with this statement more than those from better-off demographics – 78% to 73%.

Shoppers in Scotland and the North of England appear to be feeling the pinch more than those in the South East – with 78% agreeing on profiteering compared with 71%.

When asked if they agreed that supermarkets had raised their prices fairly, 37% of respondents said no grocer was being fair in raising their prices.

This compared with the 32% who said their main shop had been fair and the 43% who understood that shops had to increase prices more generally.

Walnut Unlimited said this might be down to what it called “availability bias”.

“Availability bias occurs when people rely on readily available examples or information to make judgments,” said a Walnut spokesperson.

“If they have recent or vivid memories of positive experiences in other supermarkets, while their own supermarket has more frequent negative experiences, this can contribute to a more negative evaluation of their own supermarket.”

Has this changed how people shop?

Despite mass outrage, a surprising number of people are just soldiering on. More than a quarter of those surveyed say they have not changed their behaviour to make their shop cheaper, but for those who have made moves to trim their bills, switching to own-label has been the most popular step.

This choice may seem obvious when the public is overwhelmingly concerned about unfair price rises as own-brand is typically cheaper, but own-label products are likely to have undergone the steepest hikes of any brands on the shelf.

According to research firm IRI, cereal brands have roughly increased their prices by 10% while boxes of own-label cereal have shot up by 17%, for example.

IRI global thought leadership senior vice-president Ananda Roy told Retail Week: “In the midst of complete chaos, uncertainty and disruption during the pandemic, consumers bought brands they trusted, so, almost on autopilot, they bought the big national brands.

“Retailers responded by dropping the price of private label and it still did not get them share. Once the pandemic eased, it swung to private labels again.

“Now, in the inflationary period, we’re seeing private label prices increase higher and faster than national brands.”

Second to swapping to own-label is making the most of a loyalty scheme, which just over a third of our respondents said they have done.

As well as being a response to steeper costs, that result is a testament to the investment in loyalty schemes that supermarkets have made in recent years.

There have been huge pushes from Tesco, Sainsbury’s, Morrisons and now M&S to offer members-only price schemes.

Loyalty is exploding outside grocery, too, with the likes of Boots shaking up its Advantage Card with a similar style of offer.

Digital loyalty solutions to price rises sound like a smart alternative, but when we look at how shoppers are handling price rises by age group it is clear they do not suit everyone.

Nearly every person surveyed aged between 25 and 35 had strategies to cut down on their food spending (84%), while those aged over 75 were least likely to have changed their behaviour (58%) – but that does not necessarily mean they do not want or need to.

This age group was the least likely to make use of loyalty cards, for example, with the increasingly online nature of loyalty perhaps creating a higher barrier of entry for some older people.

While overall 27% of people said they would switch shops to save cash, this figure drops to 16% for over-75s.

The survey also suggests that women are savvier than men, outranking them on all three popular money-saving tactics for reducing shopping bills.

“While it is a stereotype, women tend to engage in more thorough and price-conscious shopping behaviours compared with men,” said the Walnut spokesperson.

“There are many reasons for this, from gender roles to responsibility for household budgeting or women being more attuned to social norms and expectations related to frugality and budgeting in this climate.”