Global Kiwi

Spring is here bringing spectacular daffodils and a loosening of covid-related restrictions. Schools are back and small gatherings are allowed outside now but realistically it will be June before we are allowed to socialise in groups inside, ironically just as the sun comes out!

The impact of Brexit for business is reflected this month in a continued drop in shipments between the UK and the EU.  Business leaders attribute this trend to a number of factors: British businesses stockpiling inventory before the UK left the EU, the difficulty in navigating the post-Brexit paperwork needed and also changing official advice.

British exports to the EU year on year dropped 38%, and its exports to the rest of the world were down 7.5%.  At the same time, Britain imported fewer goods.  Imports from the EU were down almost 16% and those from the rest of the world dropped more than 9%. Despite these challenges, the UK is definitely open for business, and continues to proactively work with other exporting nations even as friction in cross-border commerce increases.

Although business leaders in the UK anticipate continuing instability between the UK and the EU in the months ahead, this environment also creates increased opportunities for NZ businesses across sectors to seek opportunities and market share.

Where are we spending (UK Focus):
Overall consumer spending contracted by 13.8% in February as national lockdowns continue, but we are seeing some signs of recovery compared with January as essential spending increases. This has been driven by strong spend in supermarkets and record year on year spend growth at food & drink specialist stores. Overall there has been a 14% increase on retail spending in February vs January, driven by a 21% increase in grocery and general household spend seeing a 10% increase. Retailers with a considered online presence benefitted from a 43.3% increase in sales. 

Food & drink specialists, electronics, Home & DIY improvements are leading the charge as the nation gets ready for spring.  Digital content & subscriptions are still driving steady growth at 42.6%, while the hospitality, travel and leisure industries unsurprisingly continue to see negative growth.  As we all still remain at home, takeaway food delivery apps continue to benefit and online eating and drinking spend grew by 92.6%.  

We take delight in seeing those septuagenarians and above strutting the streets with a skip in their step and a smile in their eyes, as the vaccine roll out continues with great success.  There’s a real sense of optimism with longer days and the knowledge that more and more people each day are protecting themselves and their loved ones by taking the vaccine.

January 2021 hit hard. Although the grey days are getting longer and a flush of snow has brought some joy, we are all feeling the effects of Covid-19 groundhog days/weeks/months/quarters.  Stronger measures imposed by Governments around UK & Europe have seen retail and hospitality sectors closed (except for some takeaways and home deliveries). Schools remain closed to all but essential worker children, and parents are not only juggling their own virtual schedules, but those of their children.  Work days are longer, where we have no commuting time, this has been replaced with more ‘e-meetings’.  Parents are playing catch up on either side of the day with missed hours trying to navigate and fulfil their small people’s needs.

We now have an established habit of buying online and direct from producers.  We dearly miss the ability and option of browsing in stores and aisles, discovering new products, range extensions, and seasonal offerings.  Digital presence and cut through is paramount. 

57% of consumers now order at least some items direct from producers – a trend that will remain beyond Covid-19. “85 million parcels have been delivered direct to customers by manufacturers this year and that volume will grow almost 30% by 2023”  Lee Collinson, Head of Manufacturing, Transport & Logistics, Barclays

D2C will remain key for many and having a clear strategy to support this, difficult whilst being so many miles away for Kiwi businesses, but vital if you want to drive revenue streams from this region with so many retail and wholesale options limited.

Supermarkets continue to see steady growth. Specialist online retail is also increasing at around 34%, with food and drink retailers enjoying a boost. Unsurprisingly travel has been hit, but some early bounce back with confidence of the vaccine rollout and look to summer holidays/staycations.

Brexit has also brought about much confusion and frustration around the country, and also for our exporters as everyone tries to get to grip with what new requirements, labelling and logistics changes there have been.  Difficulty is emerging with movement of products to Europe from the UK and best ways to navigate this.  Time for our exporters to be even closer to their markets and partners and they’re understanding that things will take time to resolve.

It may be appropriate for business operations to be reassessed, explore new opportunities, evaluate where you operate from and how you go to market. Focus on your end customer and who they are, what their buying journey is and try to understand what they are facing in their day to day lives. The reality of the deal means that yes Brexit negotiations are officially at an end, but the UK & EU will now be engaged in negotiations of one kind or another for some years to come across many sectors.

Its not surprising that the sentiment is of frustration here and there is no clear end in sight. Dates are swirling around of a ‘hope’ to a return to school and some easing of restrictions on the 8th March in the UK. A dangerous date given its International Women’s Day, there could be the wrath of all mothers!