NEWS IN REVIEW SUMMER 2017
MIXED FORTUNES FOR SUPERMARKETS
Consumer spending and retail sales growth slow over the summer
NEWS IN REVIEW SUMMER 2017
MIXED FORTUNES FOR SUPERMARKETS
The rise of the discount supermarkets in the midst of the uncertain economic climate continued as the German discount grocer , Lidl , became the seventh largest supermarket in the UK . In the 12 weeks to
August 13th , the chain saw sales rise by 18.9 % resulting in an increased market share of 5.2 %. According to data sourced from Kantar Worldpanel , Lidl is now the fastest growing supermarket in the UK , whilst all four of the major supermarkets lost market share in this period despite rising sales .
Sainsbury ’ s talks on a £ 130m takeover of grocery wholesale group Nisa have come to a stop over fears of intervention by competition authorities . The Competition and Markets Authority expressed serious concerns over a similar deal with Booker and Tesco , therefore , according to an insider , “ Sainsbury ’ s has decided to pause discussions with Nisa until it better understands how the CMA would review any deal .”
Amazon continues to expand its services globally . Retail giant Amazon
has announced a new instant collect service for its Prime members , with the introduction of fully staffed pick-up locations . Speaking about the service , Director of Student Programs at Amazon , Ripley MacDonald said “ as shopping behaviours continue to evolve , customers consistently tell us that they want items even faster . Whether it ' s a snack on-thego , replacing a lost phone charger in the middle of a hectic day or adding Alexa to your life with an Echo , Instant Pickup saves Prime members time .”
The company also announced the opening of a new UK site in Bristol , which will be hiring for positions such as operations managers , engineers , HR and IT specialists . The site will add to the 13 existing centres in Daventry , two facilities in Doncaster and one each in Coalville , Dunfermline , Dunstable , Gourock , Hemel
Hempstead , Manchester , Milton Keynes , Peterborough , Rugeley and Swansea Bay .
In addition to this , the company unveiled the location of its first warehouse in Australia , picking an industrial area outside Melbourne . Australians can already buy Amazon products from offshore , however the prospect of an Amazon warehouse adds to pressure on traditional brick-andmortar retailers . Robert Bruce , Amazon ' s director of operations for Australia added , “ Over time , we will bring thousands of new jobs to Australia and millions of dollars of investment as well as opening up the opportunity for thousands of Australian businesses to sell at home and abroad through Amazon Marketplace ."
Consumer spending and retail sales growth slow over the summer
McColl ’ s Retail saw a significant rise in its share prices as brokers suggested its new deal with Morrison ’ s could add 20 % to sales and profits forecasts by 2019 . Jonathan Miller , chief executive of McColl ' s commented on the deal saying , “ This is a defining moment for McColl ' s and builds on the transformational deal we announced last year to acquire 298 high quality convenience stores [ from the Co-op ]."
According to data from the Office of National Statistics , in the three months to June household spending increased by 0.1 %. This
marks the slowest growth since the last quarter of 2014 , whilst business investment in the British economy showed no growth at all . The slowdown was in fact worse than what was predicted by analysts , as rising inflation and low wage growth continue to dampen the economy .
They noted that it is too soon to ascertain whether the slowdown of consumer credit growth in July was due to falling confidence of shoppers or to the restraints placed on banks . Business investment is in a lull and generally exports aren ’ t seeing a substantial increase despite the fall in value of the pound , meaning the consumers are now the glue holding the economy together . Much of this concern stems from the effect of Brexit on consumer confidence and the fall in household spending , as Brits begin to tighten the reigns amidst rising inflation .
As households cut back on non-essential spending and budgeted for the higher price of food following the Brexit vote , British retail sales saw growth slow in July .
Spending fell for a third consecutive month in July , data from Visa ’ s consumer spending index showed , which marked the longest-running slump since February 2013 . The 0.8 % year-on-year decline in July was worse than June ’ s 0.2 % drop , but not as steep as the fall of 0.9 % in May . The chief economic adviser to the EY Item Club , Howard Archer , said “ consumer spending is likely to be pressurised through the latter months of the year by an ongoing appreciable squeeze on purchasing power . Indeed , real incomes growth is likely to remain negative for some months to come .”
Retail sales increased by an annual 0.9 % on a like-for-like basis , down from 1.2 % in June according to data from the BRC . The figures were seen to suggest that the economy is losing steam , with chief executive of the BRC Helen Dickinson adding , " We can expect food to continue making the running for sales growth for the time being , although driven more by price than volume , with non-food continuing to struggle .”
10 September 2017