The UK supermarket Industry

Supermarket retailing is dominated by 4 main retailers, ASDA, Tesco, Sainsbury’s, and Morrisons that take a combined share of 64.3% of the market (Mintel, 2014). However the landscape is changing and discount retailers like Aldi and Lidl becoming increasingly prominent within this sector taking 7% and 4% of the market respectively, thus broadening the spectrum of choice for consumers (Euromonitor International, 2014). Many customers are making use of this wider variety, whereby regardless of improving consumer sentiment after the recession, consumers haven’t lost frugal habits with 55% of consumers still looking out for special offers when doing their weekly shop. (Mintel, 2014) 

Price competition between the major retailers has kept market value growth low, it is expected that the market will grow by only 1.5% in 2014, and forecast to grow by 1.7 percent in the year of 2015 (Mintel, 2014). Growth levels are weak and also considering low inflation level, keeping food and beverage products at lower prices. This paper shall investigate how price deals impact consumer buyer behaviour, as an indication of their effectiveness in this competitive market.

The grocery retailers in UK are operating in a challenging trading environment led by short term marketing activities, through coupons mainly but also through price promise programmes like Tesco’s Price Promise or Sainsbury’s Brand Match, which are aimed at retaining the customer and preventing them from shopping elsewhere (Euromonitor International, 2014). This helps counter the rapid growth of discounters like Lidl and Aldi.

The private label foods market

In 2013, the market for private label food and drink is projected to reach £50 billion, which is a 19 percent increase from 2008. It is largely in line along with the wider market that with grew by 20 percent over the same period (Mintel, 2014). This also conforms to changing consumer attitudes after the recession, in the year of 2013, almost 50 percent of consumers have increased the private label goods amount they have bought. Now, private label products are embedded into grocery shopping habits of consumers with about 80 percent of customers purchasing private label food or non-alcoholic drink in the year of 2014 (Mintel, 2014).

According to Mintel (2014), he conducted a survey and showed that 55 percent of respondents indicated that price could be the main factor that will encourage them to purchase more private label products. Notably, the usage of value private label products is lower than standard private label measuring 36 percent as well as 64 percent respectively, indicating shoppers would not typically select low prices at any cost. Rather, product must deliver on an expectation of quality for being perceived to offer good money value.

According to Ailawadi et al. (2008), a study found that perceived and actual quality of private label differed to consumers. The majority of shoppers note that cheaper prices and better quality will encourage them purchase more private label products, and put the burden on retailers keeping trying to enhance the private label perception in these two areas (Ailawadi et al. 2008).

1. Psychographics

According to Mittal (2016), psychographics refer to the examination of people in accordance with their attitude, aspiration and other psychological aspects. It is about the personality, attitudes, opinions, values and interest of individuals. There are various elements which are part of this variable but this research will only focus on most important and relevant ones for this research. This research emphasises on self-perception of smart shoppers, impulsiveness, brand perception and brand loyalty which is developed for private label products of super markets (Kuesten et al., 2016). Researchers has identified various psychographic variables which they have also studied in their studies. Most commonly used psychographics are perception of being smart shoppers and their impulsive behaviour (Mishra, 2016; Schlegelmilch, B.B., 2016). The studies like Evans (2017) has mentioned that perception which is built towards a certain brand is also part of psychographi