The most commonly asked question around the food world at this time of year must be “How did Christmas Go?” Initial feedback we have received suggests that it was generally positive for many retailers in the speciality food sector, although ask me again in a couple of weeks when I will have seen 100s of retailers at our January Launch Shows which start next week.
This morning Morrison’s announced their best final quarter results for 8 years, and Tesco’s noises too see to be very positive. Those that predicted doom and gloom after Brexit so far have been confounded and may be looking as silly as the pollsters on both sides of the Atlantic at the moment, but I wonder whether their forecasts may come true in 2017. There was so much news pre-Christmas about large price increases at the beginning of 2017, due to weak sterling, I wonder whether some pre-Christmas spending was to avoid these price hikes, so delaying the Brexit gloom. By the way, the currency markets continue to move daily, depending on whether today is a “Hard Brexit” or “Soft Brexit” day. Today is Hard Brexit with the lowest rates against the dollar and sterling since before Christmas.
A couple of observations from me though on Christmas. Aldi and Lidl are now not just known as discounters, but also as retailers of fine food products, frequently beating others at the various food awards with quality products. There is no doubt that this has had an impact on delicatessens, who will have to be working harder for every £ of turnover than they used it. It doesn’t help when suppliers supply fine food products to discounters at much lower prices than independents, which came out in the press before Christmas. Suppliers can of course, supply who they want, but don’t expect to maintain sales in the independent sector at clearly large margins and sell at discounters at hugely discounted rates! Your days are numbered.
The second observation came when I was wandering around a well-known garden centre on 22nd December, which had massive amounts of very Christmassy looking stock left. The footfall was very good that day, so I am sure they shifted some of it over the following two days, but I imagine they were left with a large pile, which they are selling off at half price now. Looking at the prices of several items we supplied them with I noticed they were making 50% margin. To me, this is short-sighted and damages the sector. Yes, please make a good margin, but don’t expect to make a similar margin on food to furniture or gift products. People always need to eat, so price more competitively and make more cash margin. The speciality food sector needs to be known as one where there is quality and value to be had.
Happy New Year!