The European supermarket chains experienced downtrading and margin pressure in the previous year, with consumers cutting back on grocery spending and opting for private labels and promotions. However, new consumer research indicates a potential cautious recovery in Fast-Moving Consumer Goods (FMCG) volumes in 2024 as shoppers are beginning to treat themselves a bit more.
Key Points:
- In 2023, supermarkets faced challenges as consumers reduced their grocery spending, leading to a decline in overall purchasing. This resulted in lower industry growth compared to food price inflation, with real food sales falling below 2019 levels.
- The consumer research suggests a positive turnaround, with shopping volumes stabilizing and even increasing in some markets due to declining inflation. Despite initial challenges, a potential increase in real purchasing power and inflation stabilization could drive FMCG volume growth in the second half of 2024.
- While some consumers are still focused on saving money, there is a shift towards indulging in healthier, sustainable, local, and on-the-go products. Consumer sentiment is showing signs of recovery, with fewer individuals prioritizing cost-saving measures compared to the previous year.
- European food retail CEOs are less pessimistic about market conditions in 2024, with a majority expecting stability or improvement. Key challenges for supermarkets include cost and margin pressure, consumer downtrading, and talent acquisition.
Research Methodology:
- The insights are from the report "The State of Grocery Retail 2024: Europe – Signs of hope," conducted by McKinsey & Company and the European retail federation EuroCommerce. The analysis involved thirty major European supermarket companies and over 12,000 consumers across eleven European countries.
Overall, the research indicates a potential recovery in consumer spending habits and a shift towards more indulgent purchases in the FMCG sector. As consumer confidence improves and shopping volumes stabilize, European supermarkets may see a resurgence in growth in the latter half of 2024, despite ongoing challenges in the industry.
Comments