Sara Fogarty

December sees the UK coming out of Lockdown and into a revised 3 Tier system, although perhaps not a lot of change in day-to-day life. As well as navigating the ever-changing world with Brexit negotiations.  There is a return to some high street shopping and hospitality, venues who have been able to adapt to open with winter friendly outdoor seating are seeing steady traffic but are still challenged by working within new strict limits of serving alcohol with a substantial meal (although a scotch egg counts!) and mixed household limits. 

UK Shoppers have continued to dial up their online purchasing and we have seen Christmas shopping starting early and may be longer. Key categories are in steady growth, tracking at 12.4%+ vs. last year, this is a trend that will look to continue as online becomes more of the day to day purchasing shopping habit. 

Within the grocery sector, consumers shopping choices have seen massive increase in those wanting to cook at home, winter has seen an emergence of posh coffee at home as well as slow cooked meals and winter barbecues.  The entire supermarket industry is up 13.2% which is an opportunity for NZ businesses with strong relationships to see continued increase in demand. 

Private Label offering and share is declining to 33.9% in the last quarter from its 52 w/e figure of 34.2 as consumers resonate more with brands.  This is potentially good news as people trust brand New Zealand and may also trade up and treat themselves in this super premium sector over the festive season. 

Positive vaccine developments and the first vaccinations given on 8th December, have helped to drive FTSE 100 growth, however the government is forecasting that unemployment will be back to levels seen in the last recession in 2009.  Closures of high street retailers like Topshop and Debenhams are adding to this. 

As the snow threatens to make an appearance, yearning for a bit of joy from home has never felt so needed, especially at this time of year.  With the difficulties of limited opportunity to connect ‘in real life’ with home, sharing the amazing initiatives like Whānau – Voices of Aotearoa far from home at the Royal Albert Hall gives a well needed warm boost.

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!

The UK has the second largest B Corp Community in the world, with over 430 B Corps (and counting) representing 48 industries and over 22,000 employees, with combined revenue of £4.3 billion. Additionally, Europe currently has over 600 registered B Corp members. 

The B Corp movement is gaining traction in New Zealand as well, and is an exciting opportunity for Kiwi businesses and exports to strengthen their global footprint amongst this dedicated community. 

Joining the B Corp movement also has proven business benefits, with employees of B Corp businesses 46 percent more likely to report being satisfied and engaged. Furthermore, the B Corp movement is reflective of public sentiment in the UK, with 72 percent of the public believing that businesses should have a legal responsibility to the planet and people, alongside maximising profits. 

There is a huge opportunity for New Zealand businesses to tap into the UK market through B Corp certification. Assessment is free, all you need to do is pay an annual certification fee and re-certify every three years. As an increasing number of companies look to balance people, profit and the planet, a B Corp certification is a huge opportunity for Kiwi businesses to gain exposure in export markets as this business practice grows in traction across the world.