UK Shopper Confidence Dips Slightly Amid Inflation Concerns: IGD
Shopper confidence in the UK witnessed a ‘small dip’ in June as rising inflation left consumers concerned, the latest Shopper Confidence Index from IGD has revealed.
In June, shopper confidence remained relatively stable, dropping by just one point to -3, mainly driven by the continued vaccine roll-out.
However, it was balanced by the new Delta variant and the four-week delay in the lifting of restrictions, in addition to concerns over rising inflation.
'Shopper Confidence Is Fragile'
Director of global insight at IGD, Simon Wainwright, said, “While it [shopper confidence] remains quite strong, the last month shows us that shopper confidence is fragile due to the relative uncertainty we face as we begin to move forward from the pandemic.
“Concerns surrounding inflation are to be expected, but it’s reassuring to see that the rise in COVID-19 cases and delayed lifting of restrictions hasn’t significantly impacted confidence levels, perhaps indicating that the UK population is ready to move forward into the post-pandemic world.
Shopper confidence declined towards the end of June to -7 to coincide with the reported 26,000 new COVID-19 cases, which was the highest level since January 2021, IGD added.
London saw the biggest decline in confidence, falling from +4 in May 2021 to -2 in June 2021.
Elsewhere, annual inflation rate in the euro area (EA) increased 1.6% month-on-month to 2.0% in May 2021, while in the European Union (EU) it reached 2.3% in May, from 2.0% in April, according to data from Eurostat.
Food And Grocery Prices
The study found that 79% of shoppers expect food and grocery prices to increase in the year ahead, and 14% expect a significant increase, up from 8% in April 2021.
It also noted that 21% of lower-income households expressed concern over rising food prices.
Wainwright explained, “As the economy sets up to open further, the key focus for food and grocery retailers and suppliers will be on retaining shopper spend.
“Our IGD annual market forecasts show that the growth of retail food and grocery will slow from 8.5% in 2020 to 1.7% in 2021, as shoppers economise, the eating out industry reclaims sales, and there is more spend and opportunity available for leisure activities.”
Financial confidence reached its highest level ever, at +4, indicating that more people expect to be better off than worse off in the year ahead.
The report also added that the focus on quality versus saving money remained high at +7, compared to 0 in June 2020.
Wainwright commented, “Focusing on quality and meeting the needs of shoppers who are economising are both key priorities, as is helping shoppers make the most of their shopping experience.
“Supermarkets and hypermarkets, in particular, will be focusing on new features to reposition as retail destinations, not only to retain business but to counter the continued growth of online, which now includes the new quick commerce channel.”