The impact of Brexit on UK grocery industry and shoppers

The present, the near future, and scenarios for what may happen over the next 18 months
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Fraser  McKevitt

Head of Retail and Consumer Insight, Worldpanel Division, UK

Ray Gaul

SVP Retail Insights, Consulting Division, EMEA

With the UK set to leave the European Union later this month, we combined insights from Kantar’s shopper behaviour data and Retail IQ insights service with a survey of 7,000 shoppers to uncover the likely impacts of Brexit on the British high street.

As a starting point, we found that a significant percentage of the food purchased by UK consumers is at risk of disruption in a no-deal Brexit scenario. 62% of all fresh food is imported – primarily from the EU. 46% of imported fresh food arrives in Britain from Spain, while 22% of imported fresh food comes from the Netherlands. Indeed, 50% of all food consumed in Britain is imported, with 32% arriving from the EU.

And shoppers are already showing signs of concern; the ‘recessionary behaviours’ previously identified after the 2008 recession. Slowing of out of home eating and drinking growth, plateauing of purchases of health food categories, more snacking, and an increase in packed lunches all show that shoppers are nervous. According to our research, 80% of British shoppers are worried about the price of supermarket food and drink in the event of a no-deal Brexit, while 63% are worried about clothing costs. More than one in three shoppers have started, or are considering, stockpiling with a focus on ‘food cupboard essentials’. And ‘eating and drinking out’ is first on the list of activities that will be cut back if Brexit puts pressure on family finances.

Retailers are already taking extraordinary measures to prepare for no-deal Brexit, according to our research. As well as stockpiling non-perishables goods, testing longer-lasting varieties of fruit and vegetables, and lowering their quality standards (rejecting fewer fresh items based on ‘wonky’ sizes and shapes), retailers are quietly delisting and simplifying imported ranges of products, using machine learning models and research to understand how consumers will respond to difficult choices because of items being out of stock, and hiring their own border inspectors to fast-track their imports. We’ve even heard of retailers hoarding temporary refrigerated container units to ensure availability, and developing new security measures to protect supply chains, stores and staff against potential looting and rioting. Of course, they are also investing in more shipping capacity and alternative shipping routes.

The decision to leave the EU has affected consumers in different ways, but it’s apparent that ongoing uncertainty is having a definite impact on purchasing trends and behaviours. From a supplier’s perspective, there is little doubt amongst retailers, producers and farmers that Brexit will result in a significant disruption to the UK’s food supply, including unharvested produce and empty supermarket shelves.