Increasing concerns about rising inflation have contributed to a small dip in shopper confidence.
According to IGD’s Shopper Confidence Index for June, 79% of shoppers expect food and grocery prices to increase in the year ahead and 14% expect them to rise significantly, up from 8% in April 2021. This follows a recent acceleration of inflation in the UK and warnings from the Bank of England of further increases, despite current low inflation in the food and grocery sector.
Despite this rising concern, shopper confidence continued to remain relatively stable, dropping by just one point to -3, driven by the continued vaccine roll-out but balanced by the new Delta variant and the four-week delay to the lifting of restrictions, in addition to inflation concerns.
Financial confidence is at its highest level ever recorded at +4, which means that more people expect to be better off than worse off in the year ahead, but IGD stated that confidence continues to remain polarised.
“Whilst it remains quite strong, the last month shows us that shopper confidence is fragile due to the relative uncertainty we face as we begin to move forward from the pandemic,” said Simon Wainwright, Director of Global Insight.
“Concerns surrounding inflation are to be expected but it’s reassuring to see that the rise in Covid-19 cases and delayed lifting of restrictions hasn’t significantly impacted confidence levels, perhaps indicating that the UK population is ready to move forward into the post-pandemic world.
“As the economy sets up to open further, the key focus for food and grocery retailers and suppliers will be on retaining shopper spend. Our IGD annual market forecasts show that the growth of retail food and grocery will slow from 8.5% in 2020 to 1.7% in 2021, as shoppers economise, the eating out industry reclaims sales and there is more spend and opportunity available for leisure activities.
“Focusing on quality and meeting the needs of shoppers who are economising are both key priorities, as is helping shoppers make the most of their shopping experience. Supermarkets and hypermarkets in particular, will be focusing on new features to reposition as retail destinations, not only to retain business but to counter the continued growth of online, which now includes the new quick commerce channel.”
