The challenging trading conditions identified by most grocery and hospitality leaders are largely expected to continue into the next 12 months, according to the new Top of Mind Report 2023.
Inflation continues to present grocery retailers with a difficult sales climate and businesses are having to place a huge focus on value whilst managing increasing costs. However, around a quarter of hospitality leaders are slightly more optimistic, expecting trading conditions to improve as consumers start to enjoy more discretionary spend. Central to this positive view is inflation easing, and retailers remain cautious with the hoped-for reduction expected to be small and slow.
In a further key finding, value consciousness has been identified as a growing trend as the squeeze on household budgets continues to impact consumers. This trend is taking priority at the expense of ethical consumerism, which has seen a marked decline this year.
The growth in value consciousness perceived by grocery and hospitality leaders is in line with consumer psychometrics, with very value-led consumers increasing +4ppts year-on-year. Grocery and hospitality have responded by launching initiatives to target the needs of consumers, including the first meal deal offer from Waitrose and the launch of a £2.99 sandwich range at Pret A Manger.
Meanwhile, staffing challenges persist – although they have eased year-on-year. These are felt most by the eating out market, with the shrinking of the pool of potential employees post-Brexit perceived as the leading factor.
The proportion of grocery retail and eating out leaders facing challenges in attracting and recruiting staff has declined by -8ppts and -10ppts respectively, year-on-year. In hospitality, 70% of leaders say they are facing challenges. Over a fifth of business leaders also cited shifting attitudes within the workforce as a reason for staffing difficulties, leading to potential employees favouring flexible roles.
Improvements have been driven by initiatives to encourage flexible working and a more diverse workforce, for example a recruitment drive launched by McDonald’s to hire more over-50s.
