Opinion: Supermarkets sweep up

Christmas has come early for UK supermarkets as new data shows that November was the best month ever for grocery sales. It is therefore welcome that Tesco, Morrisons, Sainsbury’s, Asda and others have handed back the £2 billion present they were given by the Government in the form of business rates relief. However, Richard Dawson looks at how a no-deal Brexit could bring the festivities to an end

It is said that every crisis creates winners and losers – people who benefit from the turmoil and people who suffer.

Those on the winning side are particularly hard to find where the coronavirus pandemic is concerned, but supermarkets are certainly among them.

The businesses we buy our groceries from have hugely benefited from successive national lockdowns in the spring and autumn during which consumers have had little choice other than to head to their nearest supermarket for all their food and drink needs.

Often the soporific trips to Tesco, Morrisons or wherever you go for your food staples, have been the only excuse to get out of the house for an hour and break up days that all seem to blend into one.

New data from retail and consumer insight firm Kantar reveals just how much we’ve been putting into our trolleys.

According to the latest figures, take-home grocery sales rose by 11.3 per cent in the 12 weeks to November 29.

In the past four weeks, sales rose even faster by 13.9 per cent, as eating and drinking out was prohibited across England in line with the national lockdown.

What this equates to in cash terms is November 2020 being the single largest month ever for UK supermarkets, with a record £10.9 billion spent over the four-week period.

If that wasn’t impressive enough, December’s sales are likely to be even higher, with Kantar expecting spending to be close to £12 billion – £1.5 billion more than last year.

As well as there being a complete lack of competition for food and drink sales, with hospitality venues closed in many parts of the country, consumers are increasingly looking to supermarkets for essentials that can help drum up a bit of Christmas spirit after what has been an incredibly difficult year.

Sales of turkeys are already up by 36 per cent on 2019 and shoppers have spent 238 per cent more on Christmas lights.

Alcohol spending has been similarly strong, as those looking to get the festivities started early spent 33 per cent more year-on-year this November.

Against this backdrop of soaring sales and a potentially record-breaking December, it is right Tesco, Morrisons, Sainsbury’s, Asda, Aldi and Lidl have repaid the money they saved through the Government’s business rates relief scheme.

When so many are suffering, particularly those in the hardest hit areas such as non-essential retail, leisure and hospitality, the companies that have been open during successive lockdowns and who’ve done a roaring trade as a result should not be taking subsidies from the taxpayer.

The sums involved were not insignificant either. Tesco handed back £585 million and when the rest followed, the Treasury was almost £2 billion better off.

Perhaps that money could be put to work helping those affected by the collapse of other retailers, such as Arcadia Group and Debenhams?

Things, of course, are not that simple though.

The £2 billion will probably go towards patching up the colossal £394 billion budget deficit the Government expects to run up this year, a sum which will take decades and all manner of tax and spending changes to pay off.

But even if it ends up only being symbolic, the principle of the winners of this crisis paying back some of their spoils is going to be crucial in supporting the ocean of losers that coronavirus has undoubtedly created.

Kantar estimates the average British household has spent a record £4206 on groceries so far this year. It will be interesting to see how that figure changes going into 2021.

Failure to reach a trade deal with the European Union could send UK grocery price inflation through the roof, as tariffs significantly increase the cost of food imports.

Around 62 per cent of all fresh food in the UK is imported, with the lion’s share coming from EU countries. 46 per cent of imported food comes from Spain, while 22 per cent comes from the Netherlands.

Grocery price inflation is already running at 1.4 per cent, equivalent to £60 a year per UK household. This number would be dwarfed in the event of no-deal.

Panic buying was the driving force behind empty shelves in UK supermarkets this spring.

Next year, it could well be World Trade Organisation tariffs.

For now, supermarkets have never had it so good.

But a no-deal scenario could easily bring the festivities to an end.