Food and grocery retail sales are likely to be up 2.3% in the UK in the run up to Christmas, an increase on the 1.4% increase reported the previous year.
The forecast data for Q4 2016 indicates that Christmas shoppers will continue to prioritise food and health and beauty purchases over general retail.
Nonetheless, Verdict Retail anticipates that price rises are likely to be implemented into the grocery space, albeit slowly.
‘The well-publicised retailer versus supplier skirmish between Tesco and Unilever at the beginning of October is indicative of what is to come both in Q4 and 2017 in the UK food and grocery market,’ Verdict Retail said.
‘However, with post-Brexit currency headwinds beginning to bite, price rises will hit, albeit slowly. This is because with Q4 the ‘golden quarter’ for food & grocery, the major retailers will do everything they can – whether this be battling with suppliers or taking a further hit on margins - to hold off raising prices as they seek to win spend over the crucial festive trading period.
‘Many key festive lines – such as seasonal vegetables and tins of chocolate - will likely have been purchased in advance to guarantee supplies and selling price, while retailers will have to absorb any unexpected cost increases on other products as they seek to ensure any consumer uncertainty doesn’t translate into diminished enthusiasm for Christmas food shopping.’
Total retail sales are estimated to be 1.5% up year-on-year, compared to a 1.8% increase last year, the study found.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.
