Remaining competitive a top priority for retailers
A month on from the UK’s vote to leave the EU industry voices have lined up to express concern over the economic impact and stress the importance of pricing for retailers.
With recent weeks dominated by political turmoil and conflicting economic forecasts, the Food and Drink Federation has called on new prime minister Theresa May to safeguard UK competitiveness.
As well as concerns over how Brexit could impact the price of food and drink, the question of how ongoing uncertainty will affect consumer habits has become a crucial one for retailers.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “The immediate economic uncertainty is unlikely to cause a substantial fall in grocery volumes, as demonstrated by the 2008 financial crisis when basic food, drinks and household sales proved resilient.
“With an estimated 40% of the food we consume sourced from overseas, any long term change in exchange rates may threaten the current period of cheaper groceries. Historically, higher prices have led to consumers looking for less expensive alternatives such as own-label products, seeking out brands on promotion or visiting cheaper retailers.”
Analysis from Nielsen following the vote found that 67% of shoppers think Brexit will mean a rise in grocery prices, 31% plan to buy more British groceries (compared to 4% who plan to buy less) and 41% of shoppers are planning to change their spending habits to save on household expenses.
Sophie Jones, Nielsen’s senior UK shopper research manager said: “Short term volatility is to be expected. We know shoppers – even since the recession – have held onto conservative spending habits. This is likely to be reinforced more heavily in the short term.
“Price-led retailers are those most likely to benefit from shoppers changing retailer or brands to save money, which includes the discounters, Aldi and Lidl.
“To limit any potential impact, retailers need to ensure they have the right price and promotional strategies, to avoid people switching, as well as reviewing their product ranges to ensure categories are protected in the short term.”