Kantar outlines trends charting a course through Brexit

Brexit is “not the end of the world” and tracking positive trends can help grocery retailers steer through the process, according to Fraser McKevitt, Kantar head of retail & consumer insight. 

Speaking at an event organised by the Chartered Institute of Marketing’s Food, Drink & Agriculture group on 29 November in London, McKevitt acknowledged: “Brexit has already had a material impact on inflation and consumer confidence. How much of that has changed people’s behaviour to food and drink is a moot point.” 

Over the past year, food and drink sales growth had gone up by 4%, according to the latest Kantar figures, he said. There were likely to be some aftershocks following the Brexit decision, which could include rising wages and logistics costs and regulatory changes. Population growth, which helped bolster retail sales, could slow as a result of rates of immigration falling. 

However, despite these risks, McKevitt said: “Brexit is not the end of the world.” 

Positive trends included a boom in out-of-home consumption, sales of which had grown by 5% to £49bn over the past year. Take-home food and drink sales had grown by 4% to £92bn. 

Recent grocery price inflation after a period of declining prices, while not being good for shoppers, had been good for the supermarkets. That said, McKevitt predicted food inflation would fall back from its current 3.4% to less than 2% in 2018.

Discounters and online retail sites were thriving, stealing a combined total of £946 million from traditional supermarkets in 2016-2017, he said.

Traditional supermarkets were still seeing percentage growth, but it was small in comparison. They were focusing on four pillars to boost their success: own label, premium, fresh food and out-of-home purchases. “Nine out of 10 are growing own label faster than brands,” said McKevitt. “If you are trying to sell brands, you are thinking, ‘my business is being leeched away from me’.”

Own label delivered higher margins for supermarkets than brands and offered retailers a point of difference, he said. He added that premium own-label sales had grown by 15% and among that Morrisons’ premium-tier The Best range had achieved the strongest growth (Kantar, 52 w/e 13 August 2017), at 29%.

The out-of-home market had secured rapid growth in recent years, so it presented an opportunity for retailers, but it was susceptible to an economic downturn, said McKevitt.

He said further potential existed for retailers tapping into three consumer needs: the need to feel happier; the need to feel healthier; and the need for convenience. “Products that do really well tick more than one of those boxes.”

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