Flexibility matters – matching supply with demand
Photo by Tobias Nii Kwatei Quartey on Unsplash
The latest Barclays report combining hundreds of millions of customer transactions with consumer research of UK spending shows a 4% increase in card expenditure but points to households cutting back with the background of cost pressures.
Consumer card spending grew just 4.0 per cent year-on-year in March, less than half the latest inflation rate of 9.2 per cent. However, home improvement and DIY stores enjoyed a seasonal boost, while the latest season premieres of popular TV shows fuelled a rise in digital content and subscriptions.
It’s pretty clear that where food and drink is concerned Brits are continuing to find ways to reduce the cost of their weekly shop – be that cutting down on luxuries or one-off treats, while a sizeable proportion are planning meals in advance to avoid wasting food, or even using vouchers to get money off their grocery bill.
The fact that energy costs and the persistent cold weather continue to dictate activity only add to the challenges the food and beverage industry faces. Barclays notes that increasing costs are also having a wider impact on hospitality spending: over a third (36 per cent) are now cooking more at home instead of eating out, while a fifth (21 per cent) are even avoiding social plans that involve eating out so they can save money.
In line with the shift in consumer attitude, supermarkets are continuing to simplify the shopping experience and focus on providing the value consumers are looking for. Unfortunately, as Ian Hart, business development director at adi Projects, says: “Producing too many product lines now carries a certain cost, and added risks.”
It’s a case of consumers knowing what they want/can afford and manufacturers adjusting to meet demand. In fact, as Ian Hart adds when discussing the current movement to value, manufacturers can use this trend to their advantage, “using rationalisation to prioritise the production of products that are profitable to manufacture and sell, and those that are most in demand amongst consumers. This also enables supermarkets to free up essential shelf space to introduce new foods”.
What he does note that is especially interesting is production shifting back to the UK as it is not as sustainable for UK businesses to produce food and manage facilities outside the country. Will this lead to greater reinvestment in the UK business and market post-Brexit? Let’s see, but it’s certainly becoming, if it isn’t already, a priority.
Consumers aren’t wholly confident about 2023. Confidence in the UK economy has remained steady at 23 per cent. I would say the data overall indicates preparation mixed with a suck and see approach. Households are constantly judging their ability to spend on what is essential to them, some on a month to month basis. Good news isn’t far away, however.
The forecasters say a decline in energy prices means we can expect a fast deceleration in food prices. If that’s the case then we’ll see an uplift in food and beverage sales as we choose to stay in and socialise at our evolving flexible homes (or “multifunctional hubs” as B&Q call them) – from working, to entertaining, to enjoying quality me time.
- Rodney Jack, editor, Food & Drink Technology.
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