Supermarkets face uncertain year after a bumper Christmas


Separately, analysts have questioned the likelihood of speedy grocery delivery apps providing huge competition ahead, despite securing hundreds of millions of pounds to aggressively expand internationally in recent months.

Shore Capital said it expected the “bubble to pop” while Jefferies argues the on-demand apps “will remain a small part of the market” as established grocers grow their profitable online operations.

Supermarkets will also be keeping a close eye on Amazon amid speculation it could open 260 grocery stores in Britain by the end of 2025. Analysts at Jefferies, however, predict that even if the e-commerce giant hits the targets, Amazon Fresh would still remain a “niche offering” within Britain’s grocery market.

Assuming average sales of between £2m and £3m per site, in line with rivals, the stores would only account for 0.5pc of total grocery sales.

“Amazon will struggle to develop organically a large chain, which addresses the bulk of shoppers’ needs,” says Jefferies’s James Grzinic.

“The UK planning regime would require Amazon to acquire a legacy operator to provide a scaled up grocery offering.”

In 2018 it was rumoured that Amazon would have 3,000 sites in the US by 2021 as opposed to the 30-odd branded food stores at present, industry observers point out.  

Meanwhile, Black argues that the absence of “new [cost] pressures” around freight and labour costs, including the shortage of HGV drivers, should ease in the second half of the year: “We look to 2022 with cautious optimism.”

A last-minute gift for supermarkets could come at the end of 2022 if England performs well in the World Cup.

Until then they must navigate an uncertain year ahead, nevertheless starting from a position of strength thanks to a bumper Christmas.


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