Significant changes for Food Service
When it comes to predicting what’s likely to happen in the Food Service sector for the rest of the year, SalesOut has a distinct advantage. Our regularly updated data enables us to see patterns emerging and trends forming.
So, what does the mass of data at our disposal suggest is going to happen next? Before we reveal a few answers, it’s worth providing some context that will help support our thinking. We need to appreciate the extraordinary impact that working from home has had on city centres across the UK over the past 15 months.
City centres still feeling the pressure
According to the ONS, by April 2020, 46.6% of people in employment were working from home. One of the biggest consequences of the growth in home working was the lack of commuters frequenting our city centres. Not surprisingly, this had a huge negative impact on Food Service sales.
While Retail enjoyed a sales value increase of +15.9% nationally during 2020, city centres saw only +0.4%.
Most experts believe that, as the UK vaccination programme continues to see successful results, life will gradually get back to some kind of normal. And yet things are not expected to bounce back to being quite the same as they were before the Covid outbreak struck.
What do business leaders think?
Figures from a new Institute of Directors (IoD) report suggests that Covid looks set to have a lasting impact on the way businesses use office space in the future.
The business leaders surveyed revealed they had been making a number of other adjustments during the pandemic that they intended to keep in place. So, for example, 43% had embraced greater use of flexible working such as compressed hours.
Hybrid models, such as two days in and three days working from home could be a popular option for many employers, going forward. So, what does all this mean for the Food Sector in the months to come?
People are already moving out of the big cities and working remotely from elsewhere. This is likely to cause further declines for Food Service across city centres. As we are unlikely to have 100% of workers return to the office, we expect any impact currently being felt to continue, but on a smaller scale in comparison to those long spells of lockdown.
What’s in store for suppliers?
Suppliers should continue to keep a close eye on bigger pack formats. If the phenomenon for home working does become a permanent fixture for many, small pack formats that were suited to ‘on the go’ occasions could experience sales downturns as consumers look to maximise value for money.
With hospitality re-opened, the interest in building meals from scratch will be impacted, to a degree, but we should expect to see continued engagement from consumers with the concept after many will have now adopted it as part of their weekly routine.
Suppliers in categories that fall into this area of creating dishes from scratch should continue to ask themselves – how can my product ensure that the consumer’s end goal is achieved as smoothly as possible?
What’s in store for wholesalers?
With the likely change in work patterns, wholesalers should consider the ranging of products in city centre store environments. Taking into account the needs of the local population, who are now used to shopping locally, will ensure that any offset in performance for categories reliant on office workers is covered to some degree. To what degree, though, remains to be seen.
Larger ranges, smaller pack sizes
There are other trends we expect to see. 2020 performance showed that a reduction in ranges and product offerings was widespread in the Convenience sector.
Consumers were making fewer visits to the shops, due to the pandemic, and the need for variety was replaced by a desire for larger pack sizes. The big shop became even bigger. We can expect to see a reverse of this trend, going forward, with ranges getting larger and pack sizes getting smaller again.
Let’s drink to Euro 2021
Manufacturers and Convenience customers should expect to see a decline in alcohol sales when Pubs and Hospitality starts to get back into full flow on 21 June.
However, dependent on whether the Euro 2021 football tournament goes ahead as planned, we should expect to see particularly robust sales from 11 June until 11 July.
Expect the odd surprise
We should end with a word of caution, regarding any kind of predictions for Food Service. Sticking with the Alcohol sector, we can see recent evidence indicating that things don’t always turn out as expected.
In the first lockdown that began in March 2020, we saw a predictable rise in alcohol sales in UK wholesale with pubs and restaurants closed, and consumers stocking up with supplies for home consumption.
This boom continued throughout the year with alcohol in retail up +36.2% year-on-year during 2020. (Although this does need to be viewed alongside a -55.6% decline in alcohol in Food Service, with pubs and restaurants closed for long periods.)
Bubbles bucked the trend
As the year came to an end, most experts, including ourselves, expected the sales of Sparkling Wine and Champagne to be down heavily year-on-year in the run up to Christmas, against the backdrop of a suppressed social and family mixing environment.
However, this wasn’t the case at all, as many people were determined to try and make the most of things, giving new meaning to the term ‘social bubbles’.
So even though our wealth of ongoing data provides us with the insight to make better-informed decisions week-in, week-out, not even SalesOut can claim our predictions turn out correctly 100% of the time!