As we progress through the Government’s roadmap, and with all eyes on the high street reopening on April 12, Health Food Business examines the views from different corners of retail, and the impact the recent Budget announcements could have on our trade.
It’s been a year like no other in terms of trading conditions, with unpredictable patterns in terms of footfall and product demand. And despite having a roadmap set out by the Government, it has done little to settle trade in terms of retailers being able to predict any set patterns.
While this is likely to continue for some time as the nation gets to grips with venturing back out to the high street, the biggest news since the last issue of Health Food Business has been the announcement of the spring Budget. Within that, we have seen some partial wins for independent retail, but with calls for support to go much further.
The British Independent Retailers Association (Bira) has called for Chancellor, Rishi Sunak, to go further with action over business rates, urging him to consider extending the 100 per cent business rates relief in England for a full year. Currently, Sunak has extended the business rates relief for retailers until June, then discounted rates of up to two thirds for those hardest hit.
Andrew Goodacre, Bira CEO, commented: “Bira is delighted that the Welsh Government has fully recognised the challenges faced by retail over the next 12 months and it is a very positive decision to extend rates relief there for another 12 months. It makes it hard to understand why England is making businesses pay 25 per cent of their rates in 2021/22. It’s not too late for Rishi to go a little further and do the same!”
In other retail news, we have data from the British Retail Consortium (BRC), which has revealed that although we have seen a return to growth, all eyes are on April in terms of trade. Covering the four weeks from January 31-February 27, 2021, on a total basis, sales increased by one per cent in February, against a growth of 0.1 per cent in February 2020. This is above the
three-month average growth of 0.6 per cent and the 12-month average decline of 0.3 per cent.
Helen Dickinson OBE, Chief Executive at the British Retail Consortium, commented: “February saw a return to growth after a disappointing start to the year. The Prime Minister’s roadmap to reopening prompted a burst in spending on non-food items, such as school uniforms. Furthermore, with another month of lockdown still to go, online sales were high, rewarding the retailers who have invested digitally. Couples staying home for Valentine’s Day found themselves splashing out at their local supermarket, benefitting food sales. Meanwhile, the continued closure of so-called ‘non-essential’ retail has meant that non-food in-store sales remained significantly down, underlining the importance of a successful reopening in April.
“While the uptick in sales is encouraging, many retailers are concerned about the months ahead. Many retail businesses will be hoping that customers will return to shops and have spent hundreds of millions on making their premises Covid-secure, but previous reopenings have shown that demand can be slow to come back. Government has a vital role to play in building up consumer confidence across the country to power the spending-led recovery.”
Paul Martin, UK Head of Retail at KPMG, added: “After a bleak January sales performance and as the national lockdown continued, February saw the mildest of upturns for the retail sector, with just one per cent year on year growth as high street stores across the country kept their doors closed.
“Consumers continued to nest down for further weeks at home, with food and drink, technology, furniture and home accessories recording strong growth both online and on the high street. Online channels recorded strong sales across all categories, with some even registering triple figure growth, whilst high street clothing and health and beauty categories continue to suffer, with sales falling by double figures.
“With the Government’s roadmap out of lockdown in place and the vaccine rollout moving at pace, there is finally light at the end of the tunnel for non-essential retailers. High streets will be counting down the weeks until they can finally open their doors and hoping consumers swap their slippers for trainers as they start to hit the shops. Although the Budget threw
retailers a short-term lifeline with the extension of Covid support packages until after the summer, conditions will continue
to be incredibly challenging as they face subdued demand, thinner margins and rising logistics costs, alongside the accelerated structural changes to the sector. All hopes will be pinned on consumers wanting to break free from home to browse the stores that have been out of bounds for months.”
And in relation to the food and drink sector’s performance, Susan Barratt, CEO at IGD, advised: “Food and drink sales remained strong in February, with supermarkets continuing to benefit from the ongoing closure of non-essential retail and the out-of-home sector. However, from now, this growth trend will face much tougher comparisons versus the onset of
panic buying in March 2020. Nevertheless, the value of the grocery market is still unlikely to return to a more usual level
until lockdown restrictions start to ease and a more normal consumer landscape is restored.
“IGD’s Shopper Confidence Index improved for the second month running in February, reaching its highest level since January 2020. Confidence has been buoyed by the planned easing of lockdown restrictions and the swift rollout of the Covid-19 vaccination programme. This boost will likely continue in the short-term as more people are vaccinated and the
further extension of financial support for sectors impacted by the pandemic. However, confidence is likely to remain fragile among lower affluence groups.”
The Chancellor set out a £65bn three point plan to provide support for jobs and businesses to forge a path to recovery. He said his immediate priority continues to be supporting those hardest hit, with extensions to furlough, self-employed support, business grants, loans and VAT cuts – bringing total fiscal support to over £407bn.
He also set out plans to drive jobs, growth and investment to help the economy rebound – and spoke honestly about the tough choices required to put the public finances on a more sustainable path.
Delivering the budget in Parliament, he said: “First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And third, in today’s Budget, we begin the work of building our future economy.” In terms of measures announced:
- To protect the livelihoods of those hardest hit, the Coronavirus Job Retention Scheme will be extended to September and the Self-Employment Income Support Scheme (SEISS) will continue with a fourth and a fifth grant. The Chancellor announced that more than 600,000 people, many of whom became self-employed in 2019-20, may now be able to claim direct cash grants under SEISS.
- The business rates holiday in England has been extended by an additional three months.
- Grant funding will be available to businesses in England through a new £5bn Restart Grant scheme to help the high
street, providing up to £18,000, bringing the total spent on business grants to £25bn. A new Recovery Loan Scheme will also be launched to replace the existing Government guaranteed schemes, which have supported £73bn of lending to date and close at the end of March.
- As part of the UK Government’s Plan for Jobs to support, protect and create jobs, the Chancellor is increasing support with £126m of new money to enable 40,000 more traineeships, and doubling the cash incentive to firms who take on an apprentice to a £3,000 payment per hire. The National Living Wage will be increased to £8.91 from April and there will also be a six-month extension of the £20 per week Universal Credit uplift, with eligible Working Tax Credit claimants receiving a one-off payment of £500.
- The rate of corporation tax will increase to 25 per cent. In order to support the recovery, the increase will not take effect until 2023. Businesses with profits of £50,000 or less, around 70 per cent of actively trading companies, will continue to be taxed at 19 per cent. A tapered rate will also be introduced for profits above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25 per cent rate.
- 130,000 small and medium sized businesses will be supported through the new Help to Grow scheme, providing the digital and management tools needed to innovate, grow and help drive recovery.
It’s a different picture within the independent health food sector, given that it has been able to remain open for business. But that’s not to say there hasn’t been, and continues to be, the need for adjustment and adaptation. Joshua McIntosh, Head of Marketing at supplement brand, Time Health, highlighted the huge rise in digital. “As the pandemic has gone on, it’s clear that there has been a shift towards digital. An increasing number of people, including those from the older generations, are becoming more comfortable shopping and using services online. This opportunity has certainly not gone unnoticed and we have personally been inundated with requests from people wishing to start their own e-commerce supplement brands using our private label service,” he commented.
David Morrin, Commercial Manager Health and Wellness at Wholefoods Wholesale, also highlighted Brexit as an additional factor the industry has had to adapt to.
“The pressures we face now are exacerbated by Brexit-related stock issues. Sales are incredibly strong across all categories, but the sales profile is totally different to the first lockdown. We saw surges in immunity related products that were unprecedented in the first period. These sales remain strong but are nowhere near the same levels,” he commented.
“Ireland isn’t progressing out of lockdown at the same pace as the UK – we are in it for the long haul it seems as we try and force our daily infection rate down. We are progressing very well but are cautious about removing restrictions as this has backfired on us previously. Sales of cold and cough products have dropped by over 50 per cent in January – this is a result of the measures people are taking to protect themselves from Covid-19.
“The public are protecting themselves from minor seasonal illnesses by being Covid-19 aware. The dispensing of antibiotics in Ireland has dropped significantly and this has had a knock on effect to the reduction of sales of probiotics related to antibiotic use also.”
Turning in greater detail to Brexit, Morrin continued: “Brexit issues multiplied on the return to business in January. The increased documentation meant increased lead times on supply and we were also hit with intricacies on certain product lines that were not foreseen. The need for phytosanitary certification on nut butters has meant that several brands have had to cease trading with Ireland. There are a lot of suppliers that have found the realities of post-Brexit trading overwhelming and we have had to encourage them to engage with us to find solutions.
“The removal of tariffs on UK origin goods being shipped into Ireland has been a good outcome but there has been a knock-on effect with UK-based companies that use the EU for manufacturing. Tariffs are applicable on products that travel via EU-UK–EU and as a result, we have been forced to push up our pricing to accommodate for this.”
It’s also been a difficult time for those retailers with therapy rooms or clinics linked to their store, given some haven’t been able to operate in person.
Dr Marilyn Glenville PhD is the UK’s leading nutritionist specialising in women’s health and heads up the Glenville Nutrition Clinics in the UK and Ireland. She commented: “My clinics have been operating remotely since March 2020 and mostly by Zoom or Skype and it has been a learning curve for some patients to get used to new technology. But for many of them it has been more convenient to have a consultation in the comfort of their own home and this might be a trend that continues, even as lockdown lifts. We are very fortunate that with many of the functional nutritional tests, the samples can be collected at home, for example, urine, saliva, finger prick blood tests, so we have been able to offer the same level of service a person would expect in an in-person consultation.
“Also, as we have been missing our in-person events, we have put in place a series of webinars for the public on a variety of health issues and these have gained momentum compared to the beginning. Again, as people have got used to the technology and also realised that going to talks and exhibitions was not going to be happening for some time. The appetite for information on how to support and maintain your health has never been higher and I have had over 750 people register for some of the health webinars I am hosting.”
In relation to specific health complaints, Dr Glenville continued: “Patient needs in my clinic have always been very varied, but the number of women and men wishing to ensure they are optimally well, with a focus on their immunity has substantially increased both in the UK and through my clinics in Ireland.
“The desire for being tested is definitely on the increase as people really want to understand their deficiencies and how to address them. As brand ambassador to NHP, my nutrition team support them with advice when needed and again the demand in people’s health questions regarding their immunity has definitely increased, with many stocking up on key immunity supplements.”
And is this different to what Dr Glenville would expect? “It would mostly be general health issues, for example, hormone related, digestion etc., that people want help with but at the moment, the focus is also on making sure that they are well as lockdown eases and protecting themselves by making sure their immune system is supported,” she added.
“Many people are now much more aware of how important it is to take proactive care of their health and that they can improve their general and immune health by eating well, taking more exercise and immune boosting supplements. I do hope it will continue as it is wonderful to see more people taking responsibility for their health and the positivity in their
mindset as they feel better and stronger to cope with this new way of living.”
And in terms of product demand, McIntosh added: “As you might expect, our immune boosting range has been very popular since Covid-19 hit early last year. Our vitamin C, vitamin D, zinc, quercetin, resveratrol, andrographis and L-glutathione have all been in high demand. Interestingly, we noticed significant fluctuation in demand of certain product lines. Vitamin C, for example, was being snapped up faster than we were able to produce it at the beginning of the pandemic, but the demand levelled out after a couple of months. On the other hand, we noticed no immediate increase in demand for vitamin D, however, as the benefits have become clearer, this has gradually become one of our bestselling products.”
A changing high street
We know that retail has changed rapidly, triggered by the pandemic and the shutting of the high street. But while e-commerce has been the clear winner in the last year, conversely, there’s much to suggest a desire for people to shop locally. Morrin went on: “In terms of the health store trade, it is business as usual – stores are open as they are deemed to be essential businesses. In general, however, there is uncertainty about the timelines on removing the lockdown restrictions. Each week brings good news and bad news. The schools are back open, but the hospitality trade remains closed. The public are confused about the best measures to take.
“Vaccines are now available, but the rollout seems to be behind the curve seen in the UK and EU; 80 per cent of the population will be vaccinated by year end. Until these numbers are realised, Ireland will remain in a controlled lockdown state. Some restrictions may be lifted midyear, 2022 seems like the year we start to get back to normality though.”
And Dr Glenville continued: “I work in clinic so do not have a direct association or supply to retail. However, I have spoken to NHP and the brand saw good growth across all sales channels in 2020, including the retail sector. NHP has noted that many independent health stores have been able to support their customers with valuable health information because they have nutrition advisors in-store and this can help to protect their income, along with those who have an e-commerce site attached. However, regarding recovery for the retail sector as a whole, it may sadly be a different story. As the public have, more than ever, leant to adapt to purchasing everything online – from their weekly shop to clothing and household goods – the future of ‘the high street’ may be far from certain.”
And nutrition expert and author, Patrick Holford, added: “So many people are now aware about vitamin C, D, zinc and other immune-friendly nutrients so I’m sure the quantum leap in sales will plateau out at a new high. The vaccines will help but won’t be the magic bullet everyone hopes for so, once this honeymoon period is over, there will be renewed interest in how to support your own immunity, which will lead people into health food stores.”
So, how will our industry adapt to this changing trade?
“I think our industry will change and also grow as we move forward in a post-pandemic world. The awareness of the benefits of specific nutrients, such as vitamin D, that has had centre stage during this pandemic will, I hope, continue so that the message of benefits of other nutrients for people to support their health will become more mainstream,” Dr Glenville commented. Morrin added: “I feel the changes are made and here to stay. Trade events have gone virtual, meetings have gone online, and new lines of trade are being realised where existing ones may have
become prohibitive. I would hope that we return to a scenario where the trade can meet up again at events like NOPE or IFE to showcase products and forge relationships. This may take a long while, but I am optimistic that we can all meet up again to bump elbows and complement each other on our stylish facemasks!”
And McIntosh went on: “I think it’s safe to say that retail as a whole will be facing an uphill battle for the foreseeable future, especially when you consider the compounding effects of Brexit on businesses. In our local area of Lewes, for example, the high street is a very different place now than it was a year ago, with many of our beloved independent retailers having to permanently close. Despite the difficult conditions, I think businesses have shown tremendous agility by adapting to the rapidly evolving Government advice and I very much hope many retailers are able to bounce back after lockdown has been eased.”