Are M&S and Ocado ditching the luxury labels?

Amid the cost of living crisis, people have felt the pinch when shopping for groceries.

As businesses increase prices to keep up with inflation and their own rising costs, the idea of luxury shopping feels like a distant dream for many. 

But among the high costs and conscious spending of today, supermarket chains are racing with each other to offer lower prices to attract customers on a budget. Even chains that are considered “upmarket”, such as M&S and Ocado, are slashing the prices of thousands of items.

As the cost of living crisis continues and spending priorities change, could luxury labels be on the way out?

Ocado and M&S announce recent price cuts

Online grocer Ocado has announced its sixth round of cheaper prices in its latest Big Price Drop scheme – cutting the cost of more than 450 products by around 17%. 

The company stated this decision was made to continue to “offer reassuringly good value” for customers”. Ocado’s CEO, Hannah Gibson, previously acknowledged that it had been “perceived as expensive” and that it “needed to address” the cost of its goods. 

Gibson also stated: “When I started 13 years ago, our customers would have been wealthier, they would have been more foodie. I still think we absolutely cater for those people who have a bit more disposable income.”

This comes a few months after major supermarket chain Marks & Spencer slashed the prices of 65 products, in addition to the 200 price cuts made in October. 

With the aim to become the nation’s middle-class supermarket of choice – setting to beat Waitrose after a successful Christmas period – the company announced the price drop for items within its “Remarksable Value” range, including baked beans, instant coffee and long grain rice.

The company’s Family Matters Index previously revealed that four in ten also reported they would remain conscious of their spending habits, aiming to save more in 2024. Value for money was also considered the top food and drink trend for 2024.

The luxury slowdown: Is it coming to an end?

With more people budgeting their weekly food shop, forking out on luxury labels seems out of the question. As more customers become more conscious of money and seek affordability, high-end brands have faced a hit in declining sales. Most notably:

• Ted Baker fell into administration in March, resulting in the closure of 11 UK stores and the loss of around 120 store jobs.
• Burberry was recently demoted from the FTSE 100 Index, with shares slumping over the last three months following a decrease in demand and stalled brand revamp.
  
• Michael Kors reported a decline in UK sales, with revenue down by a tenth in-store, but online transactions remained strong from the beginning of the year to April.
  
• Hugo Boss reported a decrease of shares by 10% in the UK due to weakening demand – its lowest level since 2021.

On the other hand, footwear brand Kurt Geiger reported record profits, hitting £40 million in profits for the year to February. The company’s CEO Neil Clifford stated: “We have put a lot of time and effort and creativity into our product but are at a price point that is lower than all our competitors and I think that is working.”

As shoppers seek to scrimp and save, luxury grocery products and high-end fashion simply aren’t a priority at the moment. 

With typically expensive brands like M&S, Ocado and Kurt Greiger now changing their offerings to attract a broader audience, it seems the luxury label is being put aside to make way for affordability and good value for money.