Hospitality revival won’t dim retail’s growth

As the UK continues along its roadmap of easing lockdown restrictions, 17th May is the date that many consumers have been setting their sights on. Across England, Wales and Scotland, it’s the day that will potentially bring the reopening of indoor hospitality.

As retailers with hospitality establishments will know all too well, cafés, restaurants and pubs have been closed for the majority of the Covid-19 pandemic, but they’re about to experience a revival, according to research from IGD and foodservice consultant Peter Backman.

The firm’s Eating In vs Dining Out report forecasts that foodservice will grow by 54% this year (£18.6bn) versus 2020. But while this growth will inevitably impact retailers somewhat, IGD says elevated levels of home working, at-home social gatherings and financially stretched shoppers will continue to boost the retail sector.

“The reopening of the eating out sector and lifting of social restrictions will increase social dining both in and out of home and will give the market as a whole a significant boost. The value of retail is up £1.8bn on 2020 and £14.5bn on 2019,” said Nicola Knight, senior retail analyst at IGD.

The report concludes that unlocking opportunity for both retailers and hospitality firms will come down to understanding the K-shaped recovery and its influences on shoppers’ behaviours. “The findings from the report show that behaviours and spend continue to shift, creating an ever-complex landscape,” Nicola said.

The hospitality landscape

Jolyon Olivier, director and master cider maker at Napton Cidery, whose brand new tap room was set to open just as the UK plunged into lockdown in 2020, told Speciality Food he is excited to finally unveil his indoor space. “We are delighted to be opening up again. It seems like an eternity since we have interacted with our wonderful customers face to face.”

But for Alex Clayton, owner of Tasca Dali Spanish restaurant in Warwick, planning for reopening has remained challenging even under the government’s lockdown roadmap. “The whole team at Tasca Dali have been waiting for months through the cold winter to finally reopen. We have redecorated, found even rarer artisan produce from deepest Spain and are overjoyed to welcome everyone back,” Alex explained.

“Now in our ninth year, our only worry is the lack of clarity around how many people can come into the restaurant and under what conditions. Two weeks away from opening, it is still hard to plan and even take reservations when we don’t know how many people per table or how many households or if we are only at 50% capacity and so on,” he said.

However, Jolyon expects “healthy footfall” for the launch of the tap room. “It has been an especially trying time for everyone in the hospitality industry and hats off to everyone who is sticking it out. We are looking forward to the spring and summer months with high hopes for everyone returning to whatever the new normal may be. We are anticipating some exciting times ahead and genuinely excited for what the future holds,” he said.

Opportunities in food retail

Food retail sales are still on the rise, according to the latest figures from Kantar. Take-home grocery sales rose by 5.7% during the 12 weeks to 18th April. With consumer confidence growing, Fraser McKevitt, head of retail and consumer insight at Kantar’s Worldpanel Division, UK, believes that “habits are slowly returning to normal”.

“The past four weeks have been the busiest in store for the grocers in more than a year, as the number of trips made in April increased by 4% compared to March. With much of the over-65 community now vaccinated, older shoppers accounted for nearly half of the increased footfall,” he said. Fine food retailers have told Speciality Food that the warmer weather, more socialising and a continued desire for self-treating are all boosting sales at the moment.

“The return of wider retail and hospitality will naturally have a knock-on effect for the grocers,” Fraser added. For example, sales of alcohol grew by just 1% in the latest four weeks, as consumers now have the option of drinking out of the home.

Opportunities remain for retailers, however. As part of the K-shaped recovery, higher income households have stored substantial savings – estimated to be more than £100bn, IGD said. Many of these consumers are keen to trade up both every day and occasion products to elevate their home dining experience. Fine food retailers are perfectly positioned to reach these shoppers by continuing to champion quality food with strong provenance.