Grocery industry sees ‘green shoots of recovery’, says report

New research from business recovery specialists Begbies Traynor says that the UK’s grocery sector is showing signs of returning to stability.

According to the company's Red Flag Alert research for Q3 2015, UK retailers operating in the food and grocery sector posted a quarterly decline in ‘significant’ financial distress over the last three months.

Upswing

This is the first good news for the industry in over two years, as the number of businesses deemed to be 'struggling' fell from 5,258 to 5,002: a drop of 5%.

However, the new figures should be measured against Q2 2013 when the sector had 2,428 failing businesses, a massive 51% fewer than the new figures report.

Partner and retail expert at Begbies Traynor, Julie Palmer, commented on the reasons for the current state of affairs in the sector.

“The declining fortunes of the UK food retail industry and its supply chain over the past nine quarters directly mirror the meteoric rise in popularity of the German discounters Aldi and Lidl, whose no frills, low price offering has captured the imagination of British consumers, changing the face of the UK grocery sector for good," she said.

Changing models

Hard times for the UK's big grocers have seen major household names take drastic action to readjust their business models.

“Whilst the UK grocery sector is not out of the woods yet, our latest quarterly findings indicate that it is seeing the first green shoots of recovery.

“After a protracted period of job cuts, price readjustments and forced efficiency improvements, businesses across the sector now appear to be better equipped for the new normal of a low margin landscape," Palmer said.