A Christmas during a cost-of-living crisis was always going to be tough. Figures from Kantar show a 1.4% YoY sales decline in the supermarkets and sales down by 2.2% in independent and symbol stores – equivalent to £314 less per shop.

This is disappointing, but not surprising – and certainly not an outright disaster. Considering in November it was common to see surveys with upwards of 40% of people claiming they would spend less on food at Christmas, a single-digit dip is arguably the best in a series of worst-case scenarios.

But these figures are just one part of the story. Revenue has been saved primarily because of an increase in grocery prices. They now stand 14.2% higher than last year. Shoppers are spending more to buy less.

This is bound to have a knock-on effect in customer satisfaction, and while shoppers are largely understanding that higher prices are currently unavoidable, they are already seeking savings elsewhere. The rapid expansion of the discounters shows there is an alternative – Aldi opened 43 stores last year to Lidl’s 51. Increasingly, we are seeing their products deliver on quality as well as price.

Brands can no longer rely on simply being a ‘well-known and loved household name’ to get by. They need to offer real value. It can’t always be through being cheaper so we should consider activations that offer a real benefit. On-pack promotions that are genuinely useful could be a great way of doing this – think streaming subscriptions, grocery shop vouchers, days out and travel discounts. Could we see an energy drink offer money off energy bills? It might not be as farfetched as it seems.

The alternative names that line the discounters’ shelves don’t have the power to make a positive difference at scale – you do. How do you use your brands’ power to make real connections? Supporting local retailers must form part of every brand’s strategy this year. They know what their communities need the most. We must help them more.

The note of optimism in Kantar’s figures is that, as grocery inflation slowed for the second month in a row, they believe it “raises hopes the worst has now passed”. Through bold ideas, supply chain partnerships and innovation – we will have a great 2023.

Get in touch to find out how we can help you succeed this year

Five key FMCG stories this month

Asian Trader: One in five Brits need reassurance on taste of plant-based food

betterRetailing: Christmas sales not so merry for independent retailers

TalkingRetail.com: Spike in food waste app downloads as cost-of-living crisis bites

betterRetailing: Tesco still “working hard” to deliver promised benefits, five years on from Booker merger

Scottish Grocer: Awards Profile – Home Delivery Store of the Year 2022