UK food retailers experienced slump in consumer spending on food items, particularly expensive ones, indicating declining consumer earning and rising unemployment in the country.
Food sales in the UK declined for the first time in more than 20 years on account of lower consumer expenditure amidst rising unemployment and fear of recession, said the Office for National Statistics (ONS), as reported by guardian.
Sales volume at food stores in the UK declined 0.1% in Q3 2008 over the same period last year, said ONS. The total retail sales slumped 0.4% during August-September 2008, higher by 1.8% than the same period last year and worst figure since February 2006.
Sales figures are important because they have been increasing steadily every year despite weak economic situation. Further, the average growth in food sales was recorded at 2.7% in the last two decades. However, the figures are indicating that first time shoppers have cut down their spending on the food.
The decline in expenses by the families on expensive items such as meat contributed to drop in food sales figures in Q3 2008. In fact, meat costs maximum in consumers’ shopping baskets; thus, families have reduced their spending on it to save money.
Besides, shoppers have been blamed by food retailers to ditch expensive brands for inexpensive food products.
Further, online retailers are cannibalizing the sales of high street stores. After monitoring the traffic to websites, it has been found that people are increasingly buying low-priced items to reduce their shopping bills. Though Christmas is approaching, retailers are still worried as the conditions have been going bad throughout 2008 and fear of low sales is expected to continue.
According to a Research Analyst at RNCOS, “As evident from the resilient official measure of food retail sales during third quarter of 2008, consumer spending on retail products in the UK has been falling. Moreover, the downturn in consumer spending is likely to continue in future as the credit conditions and unemployment will get worse together with sharp decline in home prices and earning of people.”
Related Market Research Reports:
Indonesia Food and Drinks Market: Emerging Opportunities
Baby Food Market: Opportunities in Emerging Markets
China Fast Food Analysis
