Consumer distrust in supermarkets a boon for c-stores

By Rod Addy

- Last updated on GMT

Supermarkets such as Tesco look set to experience less growth than other grocery retail channels, according to the IGD
Supermarkets such as Tesco look set to experience less growth than other grocery retail channels, according to the IGD

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Lack of trust in food prices at the top supermarkets persists in the UK, according to a leading analyst, and independent food stores were well-placed to seize the advantage.

Shoppers continued to be cynical about supermarket promotions, according to Shore Capital analyst Clive Black, commenting on the monthly retail sales monitor issued jointly by the British Retail Consortium (BRC) and accountancy firm KPMG.

“… We sense that the big four players continue to face a lack of trust in their pricing, often over-promoting, encouraging shoppers to go to where matters are more authentic, more simple and more trustworthy; limited range discounters, high street value retailers and premium plays.

“We see little to dissuade us from our view that Britain is becoming more cynical and so anti-corporatism features when it comes to large supermarket chains; big is bad in UK supermarketing.”

‘Especially turned off’

Shoppers were “especially turned off by large supermarkets and hypermarkets, for food and non-food”​, said Black. “Some of these trends reflect tight household budgeting, so reduced wastage and smaller and more frequent baskets,” ​he claimed.

As a result of this trend, “independent stores are in the best position they have ever been in in the past 25 years”​, he told

“This is a much better context for small individual players to make their mark. Where they have a focus and angle and are quick and nimble, this is their time. It’s a much better environment today for entrepreneurial independence.”

His comments built on recent remarks from Charles Wilson, ceo of UK wholesaler Booker. Speaking at the City Food Lecture in London on February 19, Wilson urged suppliers to ditch “no-growth supermarkets” in favour of online and food discount channels.

He cited recent figures from grocery think tank IGD indicating supermarket sales would increase much less significantly than online, discount, convenience and out-of-home sales.

Non-food outperformed food

Non-food sales outperformed food according to BRC-KPMG figures for December 2013 – February 2014, but they also recorded a slowdown in retail sales momentum in February compared with January.

Overall, like-for-like industry sales increased by 1.2% in the three month period, with non-food sales up 3.5%, while food sales fell by 1.7%, the statistics indicated.

The outlook seemed brighter for the overall UK retail scene, Black said. Sales looked stronger than they had over the past few months and were set to improve and consumer confidence was also on the up.

However, the performance of major grocery retailers had not yet bottomed out, he added, warning of Shore Capital’s intention to issue downgrades to the share performance of Tesco and Morrisons in the near future.

Black and fellow Shore Capital analyst Darren Shirley also issued a “red alert”​  ahead of Morrisons’ full-year results, due out on Thursday March 13. The retailer’s sales had fallen at “an increasingly concerning”​ rate, they said.