Step into your local supermarket and you'll be confronted by a cornucopia of food unimaginable to your grandparents.
Vegetables that are pre-washed, pre-chopped, pre-packed, loose or organic; free-range, free-from and Fairtrade; healthy ranges, premium ranges, value lines, own-label or household brands ... you want it, they'll have it. Looking at this enormous spread, and the burgeoning sales of the top supermarket groups, you would think we Brits were obsessed with food.
But a report from the Office for National Statistics shows that British families now spend a smaller proportion of their income on food than at any time in the past 50 years. In 1957 the average household spent the equivalent of £4.80, or a third of its weekly outgoings, on food. This has plummeted to just 15 per cent. We as a nation are spending more of our hard-earned cash on housing, transport and recreation.
The ONS figures underline the scale of the challenge facing Britain's leading supermarkets, whose share prices came under pressure last week as analysts worry about their prospects. For all the concern about the expansion of Tesco, the supermarkets are fighting a losing battle to grow as fast as the rest of the economy. No wonder they are keen to expand beyond groceries into clothing, financial services and other non-food sectors.
Nevertheless, there is still a huge pot to play for in the food market. The consultancy Planet Retail estimates the British public spent a whopping £175bn on food last year, a figure that is growing year on year.
Given what's at stake, it is not surprising that competition between the big four supermarkets has never been fiercer. Tesco, J Sainsbury, Wm Morrison and Asda – which account for 75 per cent of grocery sales – are all vying for new ways to keep customers hooked as they battle to retain and increase their market share.
This explains the rise and rise of "ping cuisine". As people have abandoned the kitchen in favour of eating out, the supermarkets have reacted with ready meals that can be microwaved in seconds.
"Ready meals are probably one of the best things to have happened to supermarkets in the last 50 years," says Bryan Roberts, global research director at Planet Retail. "The margins on those sorts of products are very handsome, at around 30 per cent, compared with just 5 per cent across the ranges. Given that most of the added value is made by a machine or minimum-wage labour, this is very attractive for supermarkets."
Supermarkets can also charge premium prices for pre-chopped or pre-washed vegetables, again produced at little added cost. Indeed, any products with perceived added value can command a premium, providing supermarkets with a useful tool when it comes to shoring up their sales and profits.
The supermarkets are continually innovating to satisfy demands we don't even know we have. It seems, as we get lazier, in a world where we think we do not have sufficient spare time to prepare healthy home-cooked meals from scratch, we are prepared to pay top whack to the supermarkets which, by pre-chopping our vegetables, are pandering to our laziness – and rubbing their hands with glee.
But product innovation alone may not be enough to maintain their growth. Tesco, Britain's largest supermarket group, is having to find new ways to grow its market share now that it has a store in virtually every town in the UK. It already accounts for £1 in every £8 spent on the high street.
To ensure that its food sales keep on growing, the company has diversified into new markets with its move into convenience retailing and home delivery. It is considering opening town-centre, department-style stores, with food and clothing split over two or more floors, as a way of circumventing the UK's tough planning regime.
Sir Terry Leahy, Tesco's chief executive, says the retailer is "obsessed with getting it right for our customers". Despite this relentless focus, like-for-like sales growth last Christmas slowed from a 5.6 per cent uplift in 2006 to a 3.1 per cent rise at Tesco's UK stores, demonstrating just how tough the UK's food market has become.
At the same time, Morrisons appeared to wipe the floor with its bigger rival by announcing a 9.5 per cent increase in same-store festive sales. Sainsbury's delivered a healthy 3.7 per cent rise and completed 12 consecutive quarters of like-for-like sales growth.
And Asda boss Andy Bond said the chain, owned by the US giant Wal-Mart, had enjoyed its "best-ever" Christmas.
Justin King, chief executive of Sainsbury's, said the group's Basics value range and Taste the Difference premium range had recorded the strongest growth of all its sub-brands.
To be successful in food retailing in Britain, it is necessary to stock products at opposite ends of the price spectrum. All the big four supermarkets have both value ranges and premium lines. All claim to offer quality food at value-for-money prices. And all have organic, Fairtrade and healthy options.
Squeezed on all sides – by premium operators such as Waitrose and Marks & Spencer; by deli chains such as Carluccio's; by the rise of farmers' markets in towns and cities; and by value chains such as Aldi, Lidl, Costco and Macro – they need to find new ways of differentiating themselves.
Mr Roberts of Planet Retail says: "The next holy grail will be authenticity and provenance and credibility. A lot of consumers are reluctantly wising up to the fact that for every bargain, someone is getting shafted somewhere.
"So if retailers can convince shoppers they are getting value for money – but not at the moral or economic expense of someone else – that will be a selling point. Now as a nation we can afford to have a conscience."
In a small way this was proved in the recent campaign by the celebrity chefs Jamie Oliver and Hugh Fearnley-Whittingstall against the cruelty of battery hen farming as a means of satisfying our seemingly insatiable desire for cheap poultry and eggs. In the weeks after the campaign launched, several leading supermarkets reported that sales of organic and free-range chicken had soared. But it will take much more than a single spike in sales to persuade the supermarkets that conscience is set to outweigh convenience in the minds of British shoppers.
Even so, all the leading supermarket chains are taking issues such as provenance, the environment, energy saving and waste reduction seriously. It certainly does seem that this is the new battleground.
Mike Coupe, Sainsbury's trading director, says: "It is clear that the debate on food provenance, green issues and ethical sourcing is more on the customer's mind than ever before. Our promise to customers is that the food we source will be fresh, tasty, healthy and safe, which encompasses all of those issues, and we wouldn't have 16.5 million customers a week shopping with us if they didn't believe that we were delivering on that promise."
Morrisons prepares more of the food it sells on its own premises than any other supermarket. "The benefit to our customers is that we can ensure the source, quality and freshness of our food," the company claims.
Now that it has expanded across the South, Morrisons' "market street" layout, with its fishmonger and delicatessen counters, may appeal to newly won customers who might otherwise buy fresh produce from a farmers' market.
Tesco, meanwhile, is keen to promote its green credentials. Sir Terry launched a £100m fund last year to invest in environmental technology and has stated his intention of cutting the grocer's carbon footprint in half. This is in addition to local sourcing initiatives, a commitment to reduce food packaging and a steady rise in organic and healthy ranges.
All very worthy, but the last thing British consumers want is to be preached to about what they should or should not be buying. So the supermarkets are once again treading a thin line.
Mr Roberts takes a pragmatic view. "Supermarkets would be stupid to stop selling value chickens," he says. "There are still many low-income shoppers who can only afford cheap, battery-produced broilers. Equally, there is a growing class of shopper who can afford expensive, free-range chicken. So supermarkets have to be all things to all people."Reuse content