Selective shopping is the new way to control disposable income

Loyalty card holders are more price-sensitive

At domestic retail chains the average basket value is increasing and approaching the HUF 5,000 level, based on data from nearly 600,000 loyalty cards and around 230 million loyalty card transactions. For loyalty card holder customers the same amount is around HUF 17,000. However, as the average basket value grows, the basket value for loyalty card owners decreases. It seems that loyalty card holders are more price-sensitive and more likely to engage in promotions, whereas an impulse buying customer is less so. Although domestic chains have some catching up to do in terms of sales realised in promotion, their progress is impressive. While the share of sales in promotions in modern retail channels ranges from 30% to 33%, the same proportion in domestic chains is 19.8%, which represents an increase of 5.8 percentage points or 43% in one year.

Convenience categories dropping out

Shoppers are pretty much trying to let go of their shopping habits and putting fewer and fewer products in their basket: compared to the first half of 2024, the number of products dropping out began to rise dramatically in July-August. While not all categories are influenced by this trend, convenience products are very much affected. For instance the decline in small-sized soft drink and water sales was spectacular: soft drinks went from a 2.3% increase to a 5.8% decrease in just half a year. Even if the share of switching used to be very high (45%), this year it was down 4 percentage points at 41%. This mayn’t sound much, it represents a 10% plunge, suggesting that consumers are starting to return to branded products and are trying to reduce their private label purchases.

Price cuts work

It happened for the first time in the first half of 2024 that private label sales only developed by 20%, while promotions grew twice as fast. This was also the first time that both private labels and manufacturer brands could grow – mainly due to the fact that the share of promotions increased by 43%. At domestic chains the third most popular form of promotion was a 30% or bigger price discount – at least one product bought in such a promotion ended up in every second basket. In 2020 consumer income for shopping purposes increased by 1.3%, then the following year it grew by 3.1%, so in the two years combined we spent over 4% more than in 2019. Combined with the 2% rise in 2022, we are now talking about a nearly 7% surge in purchasing income over the three-year period. 2023 was the first year when average monthly spending started to drop, first by 1.3% and then by 5.5% in 2024 – this brings us back to the 2019 level. //