In the second issue of its quarterly ‘Viewpoint’ report, the economics team at IGD has focused on the challenges emerging for the food and consumer goods industry as the economy continues to recover.
The successful vaccination programme and lifting of restrictions have boosted shopper confidence in recent months. This is driving the economic recovery, but IGD highlights that significant risks remain which businesses need to be prepared for.
These include the possibility of further setbacks relating to Covid-19 due to the emergence of new viral variants. Labour shortages are also likely to continue and to create operational difficulties, whilst other inflation pressures are mounting. Meanwhile, the UK’s transition out of the EU will continue to create friction at key borders for the movement of goods.
The IGD report also highlights that businesses will need to adapt to the shopper landscape that has been changed significantly, perhaps permanently, by the pandemic.
The hybrid working-from-home / from-the-office model is likely to create operational issues (and opportunities) for retailers and suppliers. Meanwhile, further recovery of foodservice and hospitality may act as a brake on growth for retailers in the short term but also open up new routes to market for suppliers. Shopper spending priorities are also changing as new options become available, challenging spending on food and consumer goods.
As Government priorities shift back to longer-term issues, IGD expects improving environmental and health outcomes to be major themes, with far-reaching implications for the food industry. Businesses have made significant progress in improving both health and environmental practices. However, IGD highlights that there is more to be done.
“With so many downside risks in play, including Covid-19, businesses should not expect a smooth, straight recovery,” said Naomi Kissman, Strategy and Corporate Affairs Director at IGD.
“There are likely to be many bumps on the way, especially if new viral variants continue to appear. Long-term planning will be difficult for a while, so businesses will need to stay agile.”
IGD’s second edition of its quarterly Viewpoint report is free to download here
