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After nearly a year and a half, the Covid recovery is underway for the UK economy. Restrictions are lifting thanks to the success of the vaccination programme, and while we may not be returning to normal, the ‘new normal’ is looking positive for more and more businesses.
For food retailers, rapid growth in sales seen during the pandemic is set to slow down as a long-expected rebalancing between hospitality and retail occurs. Consumer goods analyst IGD predicts that the “unprecedented” growth of 8.5% in 2020 will slow to 1.7% in 2021 and to 0.9% in 2022 as the eating out industry makes a comeback, while Kantar’s data shows that a rise in store visits and a decline in average spend per trip suggests a return to more typical shopping habits.
But this sharp decline will be followed by a period of recovery, with the UK retail food and grocery market predicted to grow by 8.1% to £229.1bn between 2021 and 2026. Simon Wainwright, director of global insight at IGD, explains that this shows there is an opportunity for retailers to engage with shoppers who have built up savings during the pandemic by focusing on quality and convenience.
“Being a food hall nestled in a busy garden centre, we have been very fortunate to have retained a good level of footfall over the last six months,” says Lucy Ponsbuy of Yarnton Home & Garden. “We have seen an uplift in luxury food purchases as people celebrate at home and in their gardens with friends and family, no expense spared.”
Other businesses have used the pandemic as an opportunity to reevaluate and implement policies and practices to ensure they are better prepared for the future of retailing. “There is no question that the recent and ongoing pandemic has provided us all with a huge opportunity to look in great detail at all areas of our businesses, as well as learn some invaluable lessons that will make us better operators in the future,” says Tom Newey, CEO of Cobbs Farm Co.
“We have all had to innovate under extremely pressured (and at times quite scary) circumstances, but for the most part, that has driven positive change – from streamlining certain operations to introducing new initiatives from e-commerce to drive-through shops,” Tom adds.
As we move into the next phase of recovery, many fine food independents will be focused on engaging new customers. “We were fortunate to grow our customer numbers significantly through the pandemic and retaining and building on that will be at the core of what we do,” Tom says. “We keep hearing about a ‘return to normality,’ but I don’t think anyone really believes that we’ll ever return to the same world we lived in pre-pandemic – that’s not necessarily a bad thing; change can be healthy and we remain optimistic about the future for independent retailers,” he adds.
For the grocery sector, if the changes brought by the pandemic become permanent, that could certainly be a good thing. “Longer term, the grocery sector will remain bigger than our pre-pandemic forecasts,” says IGD’s Simon, “primarily driven by elevated levels of home working benefitting stores in suburban areas, the adoption of digital technologies in-store which will alter how and where people shop, and fewer out-of-home eateries operating. Maximising growth will be down to stores inspiring shoppers with an improved choice of relevant products and developing opportunities around events and occasions.”
Especially after the challenges Covid posed to retailers over the typically busy Christmas season, shops and consumers will both be keen to go big on celebrations in the future. “We are predicting a bumper Christmas to make up for last year’s washout,” Lucy says. “We will be sure to stock up on local and artisan produce and also luxury food and drink.”
Yet, in this ever-changing post-pandemic world, predicting the future remains a risky game. “We’re still not sure how things will look longer term for fine food retailers,” says Mark Kacary, managing director of The Norfolk Deli. “I think it’s all still far too early to make any accurate predictions, apart from one, and that is if your business was prepared with a good online presence, it’s unlikely that you’ll reach the online sales heights of mid-pandemic, but, as has been the case with us, online sales are likely to remain higher than pre-pandemic.”
Of online retailing, IGD predicts that rapid growth seen over 2020 will slow as some shoppers, particularly older ones, return to stores. However, it will still constitute food retail’s fastest-growing channel post-2024.
“In some ways, I feel that we’re trading in a period which is unlikely to be replicated,” Mark continues. “We are currently enjoying great weather and lots of people who would have normally jetted off on their holidays somewhere around the world are finding that the only option available to them is to holiday here. I think this is encouraging people to seek out the type of retailers they would seek out when on holiday. This means that currently most of our customers are first-time visitors. This does give all fine food retailers an opportunity to highlight the differences between businesses like ours and mainstream supermarkets.” While the future remains unpredictable, the present offers big opportunities for retailers.