The latest ONS Retail results for the month of July show a significant shift in consumer spending. Whilst food store sales rose by a disappointing 0.1%, specialist food stores like butchers and bakers saw sales jump by 4.7%.
Sachin Jangam, CPG, Retail & Logistics Lead, Infosys Consulting, who previously led innovation teams at Tesco and Sainsbury’s and has spent his career helping Europe’s biggest retailers improve resiliency, says the results hold a valuable lesson for food retailers, and High Street brands in general.
“Whilst food store sales rose by a disappointing 0.1%, specialist food stores like butchers and bakers saw sales jump by 4.7%,” she said: “This may, in part, be due to people shopping more locally – avoiding surging fuel prices and sticking to buying the essentials amid cost-of-living concerns. However, there’s another driver behind this, which retailers should pay attention to.
“Consumers want an experience when they buy. Whether that’s the community feel of a local bakery, or the bespoke experience of picking out your locally sourced food from the counter. Big brands can do this too, whilst optimising their profit per square foot. Supermarkets should be made into destinations, removing the goods that fail to sell and creating meaningful spaces inside stores, like a beauticians or a concession of a favourite clothing brand (as we’ve seen with Asda and New Look).
“Whilst a large supermarket may struggle to create a ‘local’ feel, making its location multi-purpose and more enjoyable than just a food shop will be a game-changer for driving footfall.”
Meanwhile Ted Rogers, Chief Revenue Officer at Digital River, explains how over a third of adults have reported that they are ‘just getting by’ financially and why this has led to people shopping more online.
“Despite sales increasing in July, there is clear evidence that the cost-of-living crisis is impacting consumer habits,” said Rogers.
“Our research found that with over one in six adults stating they are struggling financially and more than a third are just ‘getting by’, they are focusing their spending online.
“Although 58% of UK adults have reduced their spending on non-essential items in the last six months, nearly half continue to make at least one online transaction per week because of the ability to compare items online more easily and find the lowest prices.
“In the most testing of times, retailers must adapt and meet consumer demand – only those that offer competitive prices, and delivery and payment options, will survive.”