Food and drink industry set for ‘depressing Christmas’

By Laurence Gibbons

- Last updated on GMT

Related tags Marketing

Food retailers have a depressing Christmas in store, according to Mintel
Food retailers have a depressing Christmas in store, according to Mintel
Food and drink businesses are set for a depressing Christmas as price competition among major retailers will dampen price inflation on food products in December 2014, according to a report by Mintel.

Commenting on its predictions for Christmas 2014, Mintel’s director of retail Richard Perks said there were several reasons to expect retail sales growth to be more modest than last year.

“Whilst consumer confidence has trended upwards there are signs of a recent faltering in this upward movement and the prospect of interest-rate rises is likely to prompt renewed caution among mortgage holders,” ​he said.

Depress sales

“Additionally, in terms of value, lower inflation will depress retail sales. Overall, the strong retail growth that was seen last Christmas will make comparatives demanding.”

Mintel predicted food retailers would see cash sales growth of less than 2.5% in December 2014 and total retail sales would increase by 3% to £36.5bn.

This is a drop from its December 2013 estimation of 4% retail growth to £40.6bn.

Perks said lower inflation in food prices would be a “depressing force”​ on spending through food retailers in December 2014.

“Grocers are also likely to be hit by shoppers migrating away from large superstores: fewer non-food purchases, including impulse buys, will be made from grocery superstores,”​ he said. “So non-food retailers, such as specialists in clothing or beauty and department stores, will have greater opportunity to snap up these purchases.”

Non-food retailers would see growth of about 3.5%, helped by shoppers shifting spending from food to non-food categories, he added.

Internet sales would be surging over the festive period as more consumers look to shop either online at home or via smartphones and tablets, Perks said.

Internet sales

“The internet tends to out-perform at Christmas as consumers turn to the internet when they need to do ‘shopping-list’ shopping – when they are buying for themselves, browsing in-store is more of a pleasure,”​ he added.

Mintel’s consumer research survey in January showed that one-quarter (25%) of consumers were planning to shop online more at Christmas 2014 than at Christmas 2013.

Its E-commerce report found 41% of consumers were shopping via smartphones and 35% were buying via tablets.

“Mobile devices are making it easier for consumers to shop anytime, anywhere, and this is bolstering growth in internet sales,”​ Perks said.  

Online retail sales will be up by around 14% year-on-year, Mintel predicted.

Last year, retailers experienced the lowest sales growth​ for at least seven years, market research company Nielsen said.

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