Food sales suffer

Frugal Brits cut back on food bills

Friday, 24 October 2008

By Becca Talbot becca.talbot@consumerchoices.co.uk

Food sales in Britain have fallen for the first time in more than 20 years, as customers tighten their belts amid rising unemployment and fears of recession.

The disappointing retail figures from the Office for National Statistics (ONS) came as DSGi, the owner of the Currys and PC World chains, and the sports retailer Sports Direct recorded dismal sales.

ONS said that sales volumes in food stores, from local butchers to the big supermarkets, were the worst hit, with figures falling 0.1% between June and September, compared to the same period last year. This is first time figures have been down since 1986.

Prior to the economic slowdown characterised by soaring fuel and food prices, job losses and recently the global credit crunch, food sales in the UK enjoyed an annual growth rate of 2.7% for the past 20 years.

The data from ONS highlighted the full extent of the impending consumer recession, as retailers head towards what is expected to be the worst Christmas trading period in 30 years.

Aside from buying less meat and other costly food items, Britons are skipping expensive brands for more affordable items. The figures suggest that not only are consumers switching to supermarket own-brand products and foreign discount supermarkets Aldi and Lidl, but that people are actually cutting back on the amount of food they eat.

Mark Hudson, the lead consultant for the UK retail and consumer sector at PricewaterhouseCoopers, said in the Independent that hard-pressed consumers are cutting down not only on expensive food and treats but also the amount of food they waste. “It is an indicator of how tough it is starting to get,” said Hudson.

He continued: “The consumer has been battered by a number of factors, such as house prices and energy bills, but now the fourth horseman of the Apocalypse is starting to rise in the form of unemployment.”

Although the decline in sales was less than expected, British economists have warned the worse is yet to come.

James Knightly of ING Financial Markets, said in the Guardian: “Retail sales data will have significantly further to fall... Indeed with unemployment rising, asset values plunging and wages failing to keep pace with the cost of living, the squeeze on household budgets is likely to prompt a major contraction in consumption.”

Chris Eagle, commercial manager at CreditChoices.co.uk said: “High food prices and rising utility bills are currently squeezing British consumers’ purchasing power, with minimal wage growth, rising unemployment figures, falling house prices, tight credit conditions, and increased mortgage repayments combining to weigh down heavily on consumers.”

He continues: “While avoiding the credit crunch is near on impossible, there is a way to cut back on the amount you spend on food without cutting back on the amount you buy. Online retailer MySupermarket.co.uk allows you to compare the products in your cyber trolley, and then shop for the cheapest around. Sign up now and see how much you could save.”