Friday, 8 March 2019
With three weeks to go until Brexit, the nature of our exit is still unclear. Deal or no deal, there is likely to be at least some impact on food retail, as only half of our food is produced in the UK. Much of our supply of fresh food relies on frictionless trade to deliver goods from the EU to our shelves in a matter of days.
Kantar Worldpanel has reported on some of the ways in which retailers are preparing for Brexit:
- Retailers are stockpiling what they can. This is mostly limited to ingredient commodities such as milk powder and sugar, which can be used in their own label production. However, fruit, vegetables, meat and some dairy are perishable and cannot be stockpiled, leaving them vulnerable to border delays.
- Retailers are testing different varieties of fresh produce and may switch to those having a longer shelf life.
- Many imported foods are likely to rise in cost because of added trade friction. Additionally, the UK’s tariff policy is yet to be determined but any tariffs applied to imported foods, plus any further devaluation of the pound, will also increase the price on shelf. We are likely to see a further push on ‘Buy British’ to encourage shoppers to opt for locally produced foods.
- Retailers regularly review the range of products they stock but, this year, many are delisting products to simplify their imported ranges.
- Retailers sometimes reject fresh produce that does not meet strict aesthetic criteria, for instance on size, shape or colour. We may see these rules relax a little so that fewer fruit and vegetables are rejected.
- Retailers may begin to provide educational materials to teach customers how to eat seasonally. We have grown used to finding all kinds of fruit and vegetables on our shelves, year-round, thanks to complex supply chains that switch supplier as different regions come into harvest. This may become more difficult in the short-term, so retailers will aim to encourage shoppers to eat more seasonal produce.
- A few retailers are testing how customers in different stores react to changes in stock level. Stores that have more ‘sensitive’ shoppers may stock a different selection of products from stores where shoppers are more fickle.
Retailers are enacting these plans to mitigate any potential Brexit disruption, but the scale of disruption and how shoppers will react, remains to be seen. Click here to read the full report from Kantar Worldpanel.