By Jeph Ajobaju, Chief Copy Editor
Britons spent more time eating and drinking in bars and restaurants in August, but shop sales across the United Kingdom fell for the fourth month in a row.
Sales fell 0.9 per cent in August following a 2.8 per cent dip in July, and food store sales dropped 1.2 per cent, linked to the removal of restrictions on hospitality leading to more people eating out, said the Office of National Statistics (ONS).
The BBC reports Food and Drink Federation (FDF) boss Ian Wright warning that labour shortages in the food industry means consumers may not be able to find the products they like in supermarkets.
“The just-in-time system is no longer working and I don’t think it’ll work again,” he said at an Institute for Government event earlier this month.
Wright warned that the UK was in for permanent shortages. However, it didn’t mean the country would run out of food, he stressed.
But a spokesman for the government told the BBC it did not recognise claims of permanent shortages, insisting that “the UK has a highly resilient food supply chain which has coped well in responding to unprecedented challenges.
“We are taking steps to support businesses tackle a range of issues, from the pandemic to a Europe-wide shortage of HGV drivers.”
End of normal expectation
Wright, whose FDF represents more than 800 food and drink companies, stressed that “the UK shopper and consumer could have previously expected just about any product they want to be on the [supermarket] shelf or in the restaurant all the time.
“That’s over. And I don’t think it’s coming back.”
And as the sector adapts to structural changes in the labour market, Wright said that firms are having to make decisions over which products to prioritise.
Worker shortage leaves British businesses struggling to fill one million vacancies, with heavily impacted agriculture and food packing contributing to the biggest food price jump since records began in 1997.
Analysts said labour shortages and supply chain disruption hurt sales.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said shoppers and shops were “stymied by shortages in August”, but added people “rediscovered our passion for a big night out.
“Keeping the shelves full was a real battle, especially for department stores, which is one reason why we spent less in these stores in August.
“Supermarkets had a fight on their hands to keep supply chains flowing, but the might of these retailers meant they were able to track down alternative suppliers so we could keep filling our trolleys.”
Department stores most affected by supply disruption
The share of online sales increased to 27.7 per cent in August from 27.1 per cent in July, the ONS said, substantially higher than the 19.7 per cent share seen in February 2020 before the pandemic.
Jonathan Athow, ONS deputy national statistician for economic statistics, told the BBC the fall in August’s sales was “not nearly as much as in July” and, overall, remained above pre-pandemic levels.
“Other data suggest that the drop in food stores’ sales is linked to an increase in eating out following the lifting of coronavirus restrictions,” he added.
The ONS said a survey analysing retail supply chains found 6.5 per cent of all retail businesses said they were not able to get the materials, goods or services needed from within the UK in the last three weeks.
Department stores reporting being the most affected by disruption (18.2 per cent), followed by clothing stores (11.1 per cent).
Supply chains have been squeezed by the shortage of lorry drivers, leading to many businesses facing delays in product deliveries.
The lack of lorry drivers has been a long-term problem, however, the coronavirus pandemic, Brexit and tax changes have exacerbated the issue further in recent months.
Last week, Ocado became the latest supermarket to announce it was offering perks to lorry drivers, after it said higher wages and sign-on bonuses would cost the online supermarket up to £5 million.
Meeting challenges requires meticulous planning
Lynda Petherick, head of retail at Accenture UKI, said labour shortages and supply chain disruption had weighed heavily on the sector, which was “characterised by images of bare shop shelves and delayed deliveries”.
“Retailers will already be concerned as we head into the Golden Quarter as the horse may have bolted for businesses who haven’t already acted to sure-up their supply chains,” she added.
“Order fulfilment and securing stock will be challenging, while many brands could find themselves short-staffed over this busy time. Without meticulous planning, consumers may be forced to get creative this Christmas if retailers can’t meet their needs.”
Martin Beck, senior economic adviser at EY, said the fall in sales was a surprise, “given that both footfall and debit and credit card spending had improved” in August.
“That sales have continued to fall is likely to reflect the continued normalisation of spending patterns, with retail demand negatively affected in the face of greater opportunities for social consumption.”
