Food

UK food hit by trade challenges and staff shortages in wake of Brexit and COVID

According to the Lumina Intelligence Top of Mind Business Leaders Survey, challenges around importing/exporting and staff shortages have been the biggest impacts of Brexit to businesses within the grocery retail and hospitality sectors.

Qu: What have been the biggest impacts on your business from Brexit, if any?

Impact

% of business leaders who agree

Increased administrative effort for import/export

54%

More unreliable supply chain

54%

Increased import/export costs

51%

Staff shortages

49%

Slower supply chain

47%

 

Lumina, which is owned by FoodNavigator publisher William Reed Business Media, revealed over half of respondents in the survey identified increased import/export administrative efforts as well as supply chain difficulties as a result of Brexit as having the biggest impacts on business.

The impact of Brexit was more acutely felt in retail than hospitality, with almost two thirds (63%) of surveyed grocery retail professionals reporting that increased import/export costs have impacted their business.

Staff shortages – which have been exasperated by COVID and the ‘pingdemic’ which has seen the NHS test and trace app require significant numbers of people to self-isolate – were identified as an issue by 49% of business leaders. However, this problem has been felt more acutely in the hospitality sector. Almost two-thirds – 63% – of hospitality leaders said they have felt the impact of staff shortages.

“Brexit, coupled with heavy restrictions on movement caused by the pandemic, has resulted in significant resource challenges for businesses across the UK food and drink industry,” ​Katie Prowse, Senior Insight Manager at Lumina Intelligence, observed.

Significantly, business leaders do not feel they are receiving an appropriate level of government support. An overwhelming 75% of UK food and drink leaders believe that the UK government should be helping businesses overcome Brexit challenges.

Business leaders want to see the government do more to support. Issues surrounding the UK’s departure from the EU including trade deals, processes around imports and exports and EU worker rights in the UK are all the remit of the UK government and so it is vital that it plays a leading role in aiding, communicating and working alongside businesses through the transition,”​ Prowse suggested.

Future forecasts: Delivery, tech and the influence of youth

Looking at the longer-term trends business leaders expect to shape the UK food scene, the research found a shift in lifestyles has meant both the grocery and hospitality markets are adjusting to consumer demand for more delivery and tech-led solutions.

Surveyed grocery and eating out professionals listed the same top three consumer trends impacting markets. Eating out professionals were more likely to consider technology as an important driver than grocery retail professionals with key demographics within key eating out channels including bars and restaurants more likely to be younger, Lumina suggested.

Top trends

Overall

Eating Out

Grocery Retail

Demand for home delivery

34%

34%

34%

Use of internet/mobile tech/apps

34%

37%

31%

Changing behaviour of younger consumers

29%

30%

28%

 

Prowse said that the uptake of trends like digitalisation in food and beverage have been accelerated by COVID-19 and are expected to continue to gain ground post-pandemic.

“It is clear that business leaders agree with our forecasts that key pandemic-led trends will continue to evolve post-pandemic. Consumers have been forced to embrace new things during the pandemic, which have since evolved into well-established habits. Delivery and technology have always been key to attracting younger consumers, however the pandemic has resulted in all demographics embracing these trends and truly increased the opportunities available to retailers and operators,” ​the insight manager noted.

COVID-19: ‘The biggest challenge in modern history’

Unsurprisingly given the sudden closure of out-of-home hospitality channels during the UK’s lockdowns, the COVID-19 pandemic was identified as the ‘biggest challenge in modern history’ by Lumina Intelligence.

This has spurred closures in the hospitality sector as well as a step up in M&A activity – a trend seen across both hospitality and retail.

Most business leaders expect this activity to accelerate over the coming 12 months, with 50% of grocery and 89% of hospitality professionals agreeing that they will see an increase in casualties over the next year. On acquisitions, 88% of grocery leaders and 89% of hospitality professionals predicted a step-up in the level of deal-making in the year to come.

Prowse said that this shows businesses are less positive about current trading conditions – but remain optimistic for the future.

“Despite restrictions easing, businesses operating in the grocery retailer and eating out markets are less positive about current trading conditions than they were in October 2020. However, businesses are much more positive about future trading conditions,” ​she explained.

 

You can download a free bitesize version of the Lumina Intelligence Top of Mind Business Leaders Survey here​.

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