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Consumer and Retail Trends


The initial strong rebound in the world economy from recession has eased due to structural weaknesses in some economies, suggesting that major economies may face a period of below-average growth. Consumers continue to adjust their spending behaviour to lower economic activity. The Bord Bia 'Feeling the Pinch'  survey of consumer outlook for 2011 shows high uncertainty among Irish and British consumers with the only certainty appearing to be consumers adapting to the 'new normal'.

National Trends

The value of the grocery market in Ireland declined in 2010 due to deflation and shoppers trading down price tiers and also switching between outlets and promotions. Kantar figures for the year ending November 2010 show a drop of over 4% in the grocery market to €8.85 billion. Deflation and changing consumer behaviour have resulted in the average household reducing annual household bills by over €600, or 10%, compared to 2008. Price deflation was a significant element but may have bottomed out at -6.4% in the final quarter of 2009 before returning to 2.7% inflation in the final quarter of 2010. The search for value remains strong among Irish consumers with value lines the only market segment to report market growth in 2010.

At retail level Kantar data for the year ending November 2010 shows that the discounters have increased sales and expanded store numbers. Private labels have increasingly become more important in the Irish grocery market and now account for 33% of grocery sales.

The ESRI Consumer sentiment index weakened considerably in the second half of 2010, going from 67.9 in June to 44.4 in December as the impact of budget changes became clear. This suggests that consumer spending could remain sluggish for much of 2011, however the index for February had recovered to 50.3, a five-month high, and well above the all time low of 23.6 noted in July 2008.  

Retail Code of Practice

Following a public consultation process, the Renewed Programme for Government included a commitment to implement a Code of Practice for doing business in the Grocery Goods sector to develop a fair trading relationship between retailers and their suppliers, and to review progress of the Code and if necessary to put in place a mandatory code. A facilitator was appointed by the then Minister for Enterprise, Trade and Innovation to explore with all the relevant stakeholders the possibilities of agreeing a Voluntary Code and his report is expected to be presented early in 2011.

EU Trends

The results of Bord Bia's 2010 PERIscope study, which examined consumer purchasing and eating behaviour in 8 countries across Europe and globally, shows that while price remains a key consideration in driving shopping behaviour, the quality of fresh food continues to grow in importance, particularly amongst Spanish and Swedish consumers. The drive for value by consumers across Continental Europe is leading to similar developments to those in Ireland with consumers increasing their purchases of private label lines, following promotional offers and shopping between retailers more frequently. Some of the results to emerge from the study regarding consumer behaviour across Europe in 2010 were:

Canny Shoppers - The shopper has changed in profile as male shoppers are increasing in numbers and consumers focus increasingly on value. For most consumers value is not solely a function of price.

Keeping it Local - The study shows an increasingly positive perception of locally produced food with more consumers wanting to know the source of their food. For many consumers local foods offer stability and reassurance while also providing a sense of helping the economy. However, the understanding of local tends varies considerably, for some it means purchasing food produced within a very short distance of where they live while for other it applies to any food produced by the country in which they live.

Increased Family Dining - The study shows that families across Europe are eating together more and consumers are becoming more emotionally engaged with cooking and food. Use of time is still important to consumers but there is a move away from a food culture founded on convenience alone.

Healthy Eating - Consumers want a healthy diet and improving and maintaining their health and wellness is becoming a priority. However, many find it difficult to decode the labelling on products and the various nutritional claims they carry.

Clean & Green - Half of consumers continue to want to buy products that have sound environmental credentials but the consumer has shifted the emphasis back to the retailer and the manufacturer.

A recent report by Leatherhead suggests that the combination of the recession and government spending cuts in a number of Member States mean that consumers will be more likely to stay in and tighten their belts and opt for small treats rather than large indulgences. Factors at play apart from the recession include the nostalgia driven baby boomers segment, brands playing on their heritage to drive sales and a growing consumer desire for overall simplicity and transparency from manufacturers. Retailers across Europe are looking for products that deliver this and are seeking to communicate that they provide the type of products that consumers are seeking.

In 2010, the European Commission established a High Level Forum for a Better Functioning Food Supply Chain to assist the Commission with the development of industrial policy in the agro-food sector. The forum will follow the recommendations of the High Level Group on the Competitiveness of the Agro-Food Industry which was established by the Commission in 2008 and implement the initiatives proposed by the Commission in its  Communication `A better functioning supply chain in Europe'.

Organic Food  

Organic food sales in Ireland reached almost €100 million at retail selling prices in 2010. Current trends indicate that Ireland has increasingly health-conscious consumers who seek quality, convenience and value. 70% of organic produce sold in Ireland is imported and 30% is produced domestically from 1.2% of agricultural land.  There are market opportunities for producers to increase home production. Fruit and vegetables comprise the largest organic food type, with meats, dairy and other groceries making up the balance. Significant export opportunities exist in major European markets. The UK market is  estimated to be worth over €2 billion and the German organic market is valued at €5.85 billion.

National Organic Week and the National Organic Awards, coordinated by Bord Bia and funded by the Department of Agriculture, Fisheries and Food, were held for the 6th year in a row in September 2010. The events raise consumer awareness of what organic food and farming is all about and where they can source organic produce.

The Organic Demonstration Farm Programme, which is run by Teagasc together with the Department, has proven to be a major success with very large numbers of existing organic farmers and those considering converting to organic production methods attending the various farm walks around the country. This is a major instrument in encouraging conventional growers to switch to organic.

Farmers' Markets

Research commissioned by Bord Bia in February 2010 highlighted a nostalgia among consumers for pre-boom times, with consumers seeking out simpler foods such as meat, fish and vegetables and many spending more time on food preparation as they have more time and less cash due to the downturn. The definition of local food has shifted from a geographic one to one that is more producer-centric. Local food is now seen as food that is not mass-produced; it is about small-scale production and hand-made produce. Farmers' Markets are therefore seen as an obvious source of local food.

This research shows a shift in consumer shopping habits, with 35% of shoppers now tending to buy some local food at Farmers' Markets, (up from 29% in 2007). Farm Shops feature as a source of local food for 12% of consumers, a 7% increase on 2007, and supermarkets are declining as places to shop for local foods. The research also indicates that 79% of consumers buy local food to support the local economy, 74% prefer to buy foods from local producers rather than large mass-producers and 61% buy local food because they know and trust the producer. This illustrates that direct access to consumers is crucial to small food producers as a means of building rapport and illustrating the small-scale production that they operate.

Farmers' markets are an important part of the Irish food culture landscape for consumers and food tourism. By the end of 2010, 39 markets had secured the Code of Good Practice for Farmers' Markets which was launched in 2009. Farmers Markets signing up to the Good Practice Standard undertake to hold markets regularly; to source a substantial proportion, ideally 50%, of local produce from the county or neighbouring counties; to accommodate seasonal and local garden/allotment produce and to comply with food safety/labelling rules and criteria on good governance. Markets holding banners for 2009/2010 will be invited to apply for renewal in 2011 as new markets are invited to apply.