Supermarkets that reacted to slump are strongest

Stephan Shakespeare
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THE usual assumption is that the stock market is a &ldquo;leading indicator&rdquo; for economic confidence. But as today&rsquo;s cut of YouGov data shows, it doesn&rsquo;t lead public sentiment, but is actually behind.<br /><br />The graph shows the BrandIndex scores for public perception of &ldquo;value for money&rdquo; (rolling monthly average) for Waitrose, J Sainsbury and M&amp;S, alongside the FTSE 100.<br /><br />There is a strong correlation between them, at least until the end of last year. The correlations rise significantly when we shift the FTSE to one month forward.<br /><br />As with the data we looked at last week in this space, about petrol brands, what&rsquo;s interesting here is both the similarity and differences between the tracks. For three years, the brands move pretty much in tandem. But more recently, they have significantly diverged.<br /><br />The explanation may be in how the supermarkets responded to the credit crunch. Sainsbury&rsquo;s moved first to protect its brand. In September 2008 the &ldquo;Switch &amp; Save&rdquo; campaign was launched, encouraging customers to buy Sainsbury&rsquo;s own brands over other, more expensive products.<br /><br />As we can see, this campaign quickly had an effect. Consumers began to view Sainsbury&rsquo;s as better value-for-money. By the beginning of June its scores were as high as high as Lidl, Aldi and Morrisons.<br /><br />M&amp;S moved next, launching its &ldquo;Plan A Way to Save&rdquo; scheme in January. This told customers that by making &ldquo;Green&rdquo; changes they could save &pound;1,000 over the course of a year. It was less successful than the Sainsbury&rsquo;s campaign, but did produce a steady increase in M&amp;S value scores. Waitrose was last to get in on the act with its &ldquo;essentials&rdquo; range launched in March. Waitrose has seen an improvement in its value scores but it is still scoring lower than its rivals on this measure.<br /><br />Stephan Shakespeare is co-founder and chief innovation officer of polling firm YouGov.