Grocers not yet over the worst of recession
Published 27/02/2010 | 05:00
A new report released by Barclays Corporate predicts that the worst impact of the recession on grocery retailers in the UK is probably passed, but acknowledges that the Irish market has been hit harder by the downturn and will "take time" to revert to shopping levels witnessed in 2007.
The report, which was undertaken by research group Verdict on behalf of Barclays, focuses on 10 emerging trends in the food and drink sector in the UK and Ireland.
It points out that consumer price sensitivity remains at an all-time high as shoppers continue to hunt for bargains and make their money stretch further. It also underlines the fact that price rather than convenience continues to drive loyalty. In the UK, the research noted that the typical consumer now visits 3.3 stores for their grocery shop, up on the 2.8 in 2007.
Richard Lowe, head of retail and wholesale at Barclays Corporate, said the recession had caused a "major shift" in how and where consumers did their shopping. He added that retailers were attempting to expand the use of retail transaction platforms such as mobile commerce.
The surge of consumers that flowed across the Border last year to Northern Ireland has slowed recently as a higher UK VAT rate and strengthened sterling erode some of the price advantage that had lured euro shoppers.
Irish consumer prices fell 3.9pc in the year to January, according to Central Statistics Office figures released earlier this month. Food and non-alcoholic beverage prices slumped 8.2pc in the year.
Verdict's senior retail analyst, Daniel Lucht, said that while it remained a priority for consumers, the importance of pricing had diminished somewhat since it reached a peak last year.
"This means that it will become increasingly important for grocers to offer a compelling price-plus proposition, from private label ranges, to their online operations. What will matter most for grocers in 2010 is providing value to customers."
The report added that the outlook for independent retailers in Ireland "remains challenging" and that undifferentiated store owners were continuing to be squeezed by discounters and other multiples such as Tesco and Dunnes Stores.
Speaking after the launch of the report in London, Musgraves' chief executive Chris Martin told the Irish Independent that the group had continued to provide financial support to some of its members, who operate SuperValu and Centra Stores in Ireland.
He said that support had taken the form of speedier payments to franchisees as well as other means. He also predicted that food deflation would continue in Ireland for "a long period"
"The grocery market from a value point of view will continue to see a decline," he added.