UK Consumer Confidence High, Risks To Recovery Remain: IGD
Consumer confidence in the UK remains relatively high amid significant risks to economic recovery, including potential setbacks related to COVID-19, a new report by IGD has revealed.
The report noted the evidence of a 'K-shaped' economic recovery as rapid vaccination rollout and lifting of restrictions boosted shopper confidence.
However, labour shortages, inflation, and friction as the UK continues its transition out of the EU could mean bumps in the road to recovery.
Naomi Kissman, strategy and corporate affairs director at IGD, added, "Shopper confidence in the UK is relatively strong, driving economic recovery.
"Rapid spread of the Delta variant and delaying the easing of restrictions is not thought to have presented significant new economic risk, but COVID-19 remains a major uncertainty."
A Changed Shopper Landscape
As a result, businesses will need to adapt to a shopper landscape that has changed significantly, perhaps permanently, by COVID-19, IGD added.
In the short term, a hybrid working-from-home / from-the-office model could create operational issues as well as opportunities for retailers and suppliers.
Recovery in the foodservice and hospitality sectors may act as a brake on growth for retailers on a short-term basis and open up new routes to market for suppliers.
In addition, new challenges may emerge as expenditure on food and consumer goods will be affected by changes in shopping behaviour.
Kissman added, "With so many downside risks in play, including COVID-19, businesses should not expect a smooth, straight recovery.
"There are likely to be many bumps on the way, especially if new viral variants continue to appear. Long-term planning will be difficult for a while, so businesses will need to stay agile."
Shift In Government Priorities
The report also highlights that Government priorities are shifting as longer-term issues return to focus.
Improving environmental and health outcomes will be significant, with far-reaching implications for the food and consumer goods industry.
Businesses have made good progress in improving both health and environmental practices. However, it is important to recognise that there is more to be done.
A clear direction of policy by the government will help businesses to remain on track, but there are also opportunities to demonstrate leadership and shape the future policy agenda, IGD added.
Elsewhere, British retailers reported only a slight slowdown in July after sales growth hit its highest in almost three years in June, the first full month after non-essential shops reopened from a coronavirus shutdown.