Industry Professionals Reveal Main Challenges Facing Eating Out And Grocery Market

 Namnews, 18th August 2022

Lumina Intelligence has recently released its Top of Mind Report 2022, an insight from industry professionals on key market developments and the business challenges currently facing the UK eating out and grocery retail market.

Over half of leaders across eating out and grocery retail are anticipating deteriorating trading conditions over the next 12 months, with the cost of living crisis highlighted as the number one reason across both markets. This compares to 2021 figures of 34% for grocery retail and 15% from eating out who thought the market would deteriorate this year.

Inflation, labour shortages, rising costs, as well as availability and supply chain challenges, were also cited as reasons for a deterioration in market conditions across the next 12 months.

83% of eating out leaders said they have had to increase their prices as a direct impact of increasing living costs on your business compounded by 33% of leaders saying there has been a decrease in consumer footfall.

Meanwhile, attracting and recruiting staff was found to be a challenge for 68% of grocery businesses, increasing to 80% for eating out businesses. When asked why these challenges are being experienced, over a third of respondents noted the fall in European workers since Brexit, 31% pointed to the nature of pay across the sectors, and 27% of responses highlighted the impact of the pandemic causing workers to re-evaluate job priorities and move to different sectors.

The report noted that companies are responding to this. For example, pub group Young’s has launched a new internal platform to enable staff to choose their own hours and attract new employees, whilst Rick Stein Restaurants are launching a flexible careers scheme.

The study highlighted that the squeeze on household budgets and value consciousness are two of the most important long-term trends to impact the two markets. 50% named squeeze on household budgets and 41% said value consciousness as the most important long-term consumer trends, up from 15% and 12% in 2021.

When broken down between eating out and retail, the top three trends for grocery retail were more financial-focused trends including a squeeze on household budgets, value consciousness, and the changing behaviour of younger consumers. Conversely, for eating out, ethical consumerism was the number one factor, followed by value consciousness and then healthier eating.

The report concluded that companies that are aligned with consumers and drive innovation are most admired across the industry. Aldi, Coca-Cola and Tesco were all highlighted as brands that industry leaders admired in retail, alongside Warburtons, Arla and Lindt.

Within eating out, operators that were most admired were those that delivered consistency to consumers whilst innovating. For example Wagamama, Nandos and McDonald’s. There was also a recognition for smaller brands for their clear proposition and employee wellbeing, with companies such as Peach Pubs, Megan’s and Oakman Inns flagged as having these traits.

NAM Implications:

• Reports of this nature should be taken at face value.
• (i.e. pointless wasting energy challenging the data, unless you can afford to replicate the data…)
• Best use as a benchmark for aspects that affect your business and categories.
• And just explore the implications…
• If only as a means of challenging false optimism.
• (think of a smaller, value-conscious marketplace, where the only thing that counts is delivering more than says on the tin, every time, for a long time…)