Food Sector Sees Strongest Growth Since 2013

The food sector has recorded its strongest quarter of growth since November 2013, according to latest figures from the BRC-KPMG Retail Sales Monitor.

The supermarket price wars and rising consumer confidence helped lift overall retail sales in September by 1.3%, against a 3.9% increase in the same month last year and a dip in August.

However, on a three-month basis, total food sales increased 1.6%, its best level in almost three years. The BRC said that the recent pick-up in the food performance placed the 3-month average at about three times the rate of the 12-month average of 0.5%.

Meanwhile, total non-food sales over that quarter rose just 0.5%, dragging down the 12-month average to 1.3%. Affected by the warmer weather, fashion categories held back growth while the back-to-school and big ticket items saw solid growth.

Helen Dickinson, Chief Executive of the BRC, said: “September saw the consumer confidence index restored to levels seen before the EU referendum in June which did translate into a willingness to spend on bigger ticket items. However, the monthly outturn continues to highlight ongoing volatility in retail spending and to reflect longer-term economic headwinds as retailers begin to seek to mitigate the impact of higher import costs due to the fall in the value of the pound.

“Against the current backdrop of intense competition and transformational change in the industry, it’s crucial that retailers are able to continue their excellent track record of keeping prices low for their customers and offering great choice and value.”

Commenting on Food & Drink Sector Performance, Joanne Denney-Finch, Chief Executive of IGD, said: “In encouraging news for food and grocery companies, the growth seen through the summer months continued into September. Shoppers are feeling generally upbeat, with three-quarters (76%) expecting their personal financial situation either to improve or stay the same in the coming year, up from 69% in August”

“Although the sales growth remains modest, grocery retailers and manufacturers have reason to feel optimistic as Halloween, Bonfire Night and Christmas come on to the horizon.”

NAM Implications:
  • Where at: Reasonably uniform growth across the sectors.
  • Where headed: Providing Brexit-induced cost increases are reflected uniformly, consumer confidence should not be unduly dented…
  • Effect on you: Meanwhile, we are in very fragile territory that needs careful handling.
  • Action: Time to realistically assess potential for optimising the impact of Halloween, Bonfire Night and Christmas on consumer behaviour