Are we teetering on the brink of recession? It’s the question people have been pondering throughout the second half of last year and the new year doesn’t seem to have slowed the debate.
The threat of the big R continues to hang over our heads. But, if you’re expecting me to make a prediction, then you’ll be sorely disappointed – no headlines of “Asda forecasts recession” will appear in this column.
But there’s one question I can answer. Have we seen a shift in shopping habits that may point to a downturn? For example, are customers trading down from premium to standard or value ranges? Are they buying less or even going elsewhere?
I can honestly say that, at Asda, we’ve seen no change in buying habits that would signal a downturn. Customers are still coming through the doors in record numbers and buying as many items. And, in regards to trading down, we’ve not seen anything that may suggest it is happening. In fact, our Extra Special range achieved more than 25 per cent growth in 2007.
And figures elsewhere in the supermarket industry don’t indicate a shift either. People are not flocking to the discounters as much as one would expect, judging by recent TNS figures, and our more expensive rivals are still keeping their numbers up despite higher prices.
So what can I say about 2008? Our research has shown that there is going to be a further tightening of belts because of several factors, including higher energy bills, fuel and mortgage costs.
After taxes and essentials are paid out, money left in the pocket is getting less and, worryingly, there is a widening gap across the regions, with up to a£200 a week difference between a typical family in London and the Southeast versus Wales and Northern Ireland.
Therefore, value will be vital and value-driven retailers are perfectly positioned to respond. We’ve made thousands of price cuts already and will continue to make iconic products available at previously unseen prices – like the£5 Harry Potter book,£22 cashmere jumper and£8 bottle of Baileys – signifying our determination to remain the lowest-priced supermarket for your weekly shop.
I honestly believe that value comes through competition and this is where I hope the Competition Commission takes the common-sense route in 2008.
Its provisional findings were encouraging, identifying the UK grocery market as delivering a good deal for consumers, but highlighting that there are nearly 1,000 places where choice and diversity is limited. We would like to see changes to the planning system that will encourage more competition and we strongly believe customers would benefit through lower prices, more choice and better quality – which is what they will need most in 2008.
That is why my New Year’s resolution is to be named the cheapest grocer for the 11th year in a row.
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