Blog: The only certainty is uncertainty
Dean Best | 23 March 2009
“Nobody really knows where we're headed at the moment.”
The only certainty, at the moment, is uncertainty. These are, we are told, turbulent times economically and, despite some optimistic tones (and some downright gloomy ones), Sir Stuart Rose's above prognosis on the state of the economy best characterises the true feelings of those in business right now.
Sir Stuart, the boss of UK retailer Marks and Spencer, was addressing a retail industry conference in London last week, two days that heard some upbeat messages (stand up, Sainsbury's chief Justin King) as well as some sombre notes, particularly in a lucid presentation from the head of Unilever's operations in the UK and Ireland.
Dave Lewis's seminar injected a necessary dose of realism into a sometimes over-optimistic assessment of the UK consumer. As Lewis said, there are opportunities out there but, to grab those opportunities, it's first necessary to really understand your customer's desires – and fears – amid the economic turmoil.
Some food makers believe in the resilience of our sector. At the IFE trade show in London's Docklands last week, the likes of cheese-maker Wyke Farms, poultry firm Gressingham Foods and Fairtrade chocolate group Divine Chocolate were upbeat about their prospects despite the downturn. Even organic lobby group The Soil Association was buoyant about the outlook for the sector, despite claims elsewhere that the downturn is hammering organic sales.
However, elsewhere last week came signs that the food industry is fully recognising that the economy is putting the consumer under pressure. In the US, Wal-Mart announced a revamp of its Great Value private-label brand amid greater demand for own-label goods Stateside. In France, food retailers agreed to lower prices on certain products, with the average price of own-label ranges set to come down.
Purveyors of premium products are feeling the pressure. Upmarket chocolate maker Lindt & Sprungli warned last week that its profits would tumble this year as the downturn hits demand for high-end chocolate.
Chocolate is seen as one of the food industry's more defensive sectors but Lindt's warning proves that the downturn is souring the outlook for many firms. The trouble is nobody is quite sure just what the future holds.
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