Waitrose And Tesco Lead The Way In Taking On More British Suppliers

Amid increased demand from consumers for local products, a new study shows that Waitrose and Tesco are leading the way in taking on more small British suppliers.

According to ‘Buying British in 2017’, a report from supply chain standards member organisation GS1 UK, the UK is seeing a resurgence of small businesses producing “authentic, heritage products”.

GS1 UK said its membership data reflects current business and consumer trends as it shows an uptick in more modest-sized new joiners compared to previous years, as consumers increasingly want their food, drink and clothing to demonstrate their local heritage and have fewer air miles. In 2016, 78% of new members had a turnover of £500,000 or less, compared to 58% of all members in 2015, demonstrating a shift towards smaller businesses.

The apparel industry was the most significant source of new joiners in 2016, with 21% of companies coming from this field, pushing their total numbers beyond 4,000.  However, businesses in the food and groceries sector account for the largest single percentage (20%) of GS1 UK’s membership.

The sector is also one of the fastest-growing, with 12% of new joiners in 2016 originating from the food and groceries sector as shoppers seek to buy British.  In terms of actively thinking about the provenance of food, 79% of consumers surveyed said it was a consideration (63% some of the time, 16% all the time) and just a fifth said they never thought about it. Three-fifths of shoppers say place of origin is at least as important to them as other factors, such as price and quality, and 55% specifically say they prefer buying UK brands to support British businesses (citing reasons, such as increased trustworthiness and being more attuned to needs and tastes).

GS1 UK used the British beer brewing sector as example of an industry that has benefited from these trends. It has grown from just 140 breweries in 1970 to an excess of 1,700 – with the UK now having more breweries per capita than any other country. Other craft drinks are also seeing an upswing in demand. The number of gin distilleries has doubled in six years and sales of the spirit recently surpassed £1bn for the first time.

This increased demand for craft drinks is reflected in the growth of GS1 UK beverage members. And although drinks manufacturers account for a relatively small percentage of overall members – less than 1% of GS1 UK’s total membership – the rate at which they join is increasing significantly. In 2016 they made up 3% of new joiners, swelling their ranks by 41% from 316 to 447 over a 12-month period.

The GS1 UK data reveals that the most popular sales channel for its members is online via their own websites, with 71% doing this. Following closely behind is online marketplaces, such as Amazon and eBay, with just over two-thirds (67%) utilising such platforms that allow them greater scale and visibility than they could achieve under their own steam. Reflecting the trend towards more smaller local companies, only a third (35%) use wholesale or distribution channels, and just a quarter (26%) use other retail stores (i.e. not their own premises).

Of the major supermarkets, Tesco as the largest retailer, affords the most opportunities to GS1 UK’s new joiners over the past five years (33%). But it is Britain’s seventh largest supermarket Waitrose that sits in second place – defying its 5.3% market share – by providing opportunities to 18% of GS1 UK’s new joiners. Indeed, many of the 2,500 local and regional products Waitrose stocks regularly outsell their big brand equivalents. GS1 UK said this shift isn’t without motive and is driven primarily by consumer demand.

Supermarket Market share* Analysis of opportunities
for GS1 UK joiners
Waitrose 5.3% 18% 12.7%
Tesco 28.1% 33% 4.9%
Lidl 4.5% 6% 1.5%
Co-operative 6.0% 7% 1.0%
Iceland 2.3% 1% -1.3%
Sainsbury’s 16.5% 13% -3.5%
Aldi 6.2% 1% -5.2%
Asda 15.6% 8% -7.6%
Morrison’s 10.9% 3% -7.9%

Source: Kantar World Panel, 29 January 2017

Gary Lynch, CEO at GS1 UK, said: “Buying British is back in vogue. And it’s the smaller companies that are driving this trend. Brits love an underdog story and this affinity to the unlikely hero isn’t limited to the sporting arena, with shoppers being just as likely to back the small guy at the checkout. GS1 data shows consumers are becoming more domestically focussed when it comes to their spending habits.

“Heritage, provenance and traceability are no longer nice-to-haves but increasingly important factors that can make the difference between where consumers choose to spend their money. While there will always be some products and services we’re happy to go to major multinationals for, supporting the local start-up is back on the agenda.”

Andrew Cairns, CEO at Mammy Jamia’s, a premium preserves and dressing producer, commented: “As the owner of a British company that makes its products here in the UK, I’m delighted to see that buying British is back in vogue. Buying British food and grocery is essential for the sustainability of UK food businesses, food self-sufficiency, jobs and growth. There are surely a variety of great reasons that buying British products from British companies has a positive effect on the whole picture of our economy.”