Grocery retail has remained largely flat despite the latest ONS data revealing that UK retail sales volumes nudged upwards by 0.3% in July with specialist food stores performing particularly well.
Food store sales volumes rose by just 0.1% in July 2022, with sales volumes now sitting 0.1% below the levels seen in February 2020. Grocery retailers have reported a decline in sales volumes over recent months due to the effect of increasing food prices and the impact of the cost-of-living crisis.
The 0.3% rise in July’s UK retail sales comes after a 1.2% drop in the three months prior. However, retail sales volumes now sit at 2.3% above their pre-coronavirus February 2020 levels, despite being down year-on-year.
However, while general grocery sales saw a disappointing rise, specialist food stores such as butchers and bakers saw sales jump by an impressive 4.7%.
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Analysts believe this holds a valuable lesson for food retailers, with Infosys Consulting’s retail and logistics lead Sachin Jangam saying this boost could be attributed to people shopping more locally as they “avoid spending money on fuel and stick to buying the essentials” amid cost-of-living pressures.
Jangam also highlighted the importance of customer experience, from the “community feel of a local bakery, to the bespoke experience of picking out your locally-sourced food from the counter”.
“While a large supermarket may struggle to create a ‘local’ feel, making its location multi-purpose and more enjoyable than just a food shop will be a game-changer for driving footfall,” he said.
Elsewhere, Richard Lim, chief executive of consultancy firm Retail Economics, said that July’s ONS data felt like “the last hurrah” before the effects of the economic downturn take hold.
“The outlook is as tough as I can recall. Inflation is still yet to peak, and the impact of rising interest rates takes time to trickle through to households,” he said.
“Consumer confidence has hit an all-time low and even those that do have cash to spend will be more inclined to bolster their rainy-day fund given such an uncertain outlook.”
