Analysis: World Cup could be a pre-Christmas nightmare for UK supermarkets

  • Food retailers under strong pressure from cost inflation
  • The World Cup and Christmas usually provide sales bargains
  • Coincident events complicate logistics, spending habits

LONDON, Oct 19 (Reuters) – The Winter World Cup has added a new level of uncertainty to Britain’s supermarket Christmas business outlook: how to persuade cash-strapped shoppers to buy yule logs and fancy cookies with beer and pizza?

Held between November 20 and December 18, the soccer tournament in Qatar falls directly into the key festive commercial district where the fiercely competitive sector typically makes much of its annual profits.

Likewise, the World Cups, traditionally held during the northern hemisphere summer, usually give UK supermarkets a major boost as households stock up on beers, wines and spirits, barbecues and snacks and organize large gatherings.

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However, buyer confidence levels were at historic lows even before the government’s new economic plan, now reversed, pushed up mortgage rates and raised fears of a sharp fall in property prices to deepen the crisis. of the cost of living.

This means that the combined expenses will likely be lower than if the two events were months apart.

Retail executives say the World Cup, moved to winter to avoid Qatar’s intense summer temperatures, has totally ditched the algorithms they increasingly use to predict trade and plan their logistics.

“It’s a nightmare to take advantage of it,” said one grocery industry veteran, speaking on condition of anonymity.

“It’s also a headache of execution, because just when you want to organize everything at Christmas, you have to kind of mirror alcohol blocks and snacks for the World Cup,” he said. he declares.

There is also a danger that people, distracted by the football, will not feel festive and only turn their attention to Christmas spending after the tournament, resulting in a frantic final week of bargaining, he said. declared.

“It’s a bit of a curve ball in terms of planning Christmas and a World Cup at the same time,” Tesco chief executive Ken Murphy told reporters this month (TSCO.L), the most major British retailer.

Another factor will be if England’s poor form continues and they don’t progress beyond the initial group stage of matches.

For now, supermarkets are organizing their stores on the basis that England and Wales, who have also qualified, are doing well.

PLAN B

But they have a plan B where space devoted to beer, snacks and football merchandise can quickly be replaced with Christmas champagne, Prosecco, gifts and decorations when the home countries leave.

However, executives say planning is further complicated by legislation which came into force in England on October 1 limiting the placement in stores of foods high in fat, salt or sugar.

The new rules mean that products considered less healthy, such as confectionery, cannot be displayed in key store locations, such as entrances, checkouts, aisle ends and their online equivalents.

Tesco is planning dedicated signage in stores to alert customers to products and offers on offer for football celebrations. This will be separated from the area dedicated to Christmas products.

During the last World Cup in July 2018, which coincided with a long spell of warm weather, shoppers visited UK supermarkets an additional 13 million times, according to market researcher Kantar.

Excluding the Christmas and Easter weeks, the week in July 2018 in which England defeated Colombia and Sweden saw more spending on alcohol than ever before – some £287million, a- he declared.

Similarly, shoppers spent 1.2 billion pounds ($1.4 billion) on alcohol in supermarkets during last year‘s Euro 2020 football tournament, delayed by the coronavirus pandemic, during which England reached the final at Wembley Stadium in London.

Of course, customers visiting stores to buy festive goods could purchase World Cup supplies at the same time. But with tight household budgets, supermarket chains are bracing for less of a trade windfall.

HOME VISIT

UK food retailers are already under severe pressure from cost inflation and changing shopping habits. Earlier this month Tesco slashed its profit forecast, while last month Morrisons, the Co-op and Aldi UK all reported lower profits.

“It’s not going to be as big as the summer World Cup, that’s for sure,” said Fraser McKevitt, head of retail and consumer insights at Kantar.

But he said a potential silver lining for supermarkets could be Britons avoiding bars and instead watching more home games, complete with necessary refreshments.

For the moment, the leaders are doing well.

“If one of the Country of Origins happens, it could make for a really interesting celebration,” said Giles Hurley, CEO of discounter Aldi UK.

“I’m actually very confident that the British public will celebrate this Christmas.”

Much will depend on how deep England go in the tournament.

“What we know with other events and more recently the Women’s Euro is that a lot depends on how England perform,” McKevitt of Kantar said.

“If England are successful, the looks, the celebrations and the buying will grow.”

As always, market leader Tesco appears best positioned, with a foothold in both retail and wholesale markets.

“Whether (people) choose to party in the pub, and we serve them through (wholesaler) Booker, or they party at home, and we serve them through Tesco, we don’t mind as long as they’re having fun. That’s what we expect,” Murphy said. ($1 = 0.8814 pounds)

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Reporting by James Davey; Editing by Alison Williams

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