New Year is a month or more away, which means we have had ample time already to break those various resolutions we made on 1 January. But it is still the time for thinking about the year that has just gone and, rather more importantly, to ponder the year ahead. Doubtless this will form the basis of many conversations in the busy exhibition halls at Fruit Logistica in Berlin this month. From the size of last month’s issue of Eurofruit, you would assume that the business is in robust health.
Indeed, it is. Fresh produce businesses have to a large extent become inured to the challenges that each season throws at them. They seem able to take the punches, hang onto the ropes and bide their time until the onslaught ends.
Europe has been through the mill over the last 12 months. The sovereign debt crisis, which since last summer plagued our every waking moment and even disturbed our sleep, appeared to fade momentarily over Christmas. It was as if Santa had resorted to taking away our problems rather than leaving us with any gifts.
But as winter turns to spring and Christmas gives way to Easter, you’d be a brave soul to bet against Europe facing another season of anguish and torment – its own new Calvary. As the downgrading of France’s credit rating shows us, the crisis has not gone away.
Perhaps we have just got used to it. Its impact on consumer behaviour is interesting. Europe’s crisis has been especially severe in Portugal, Ireland, Greece and Spain, but Italy, which found itself in the eye of the storm towards the end of last year, has not been spared the misfortunes. Cash-strapped consumers are tightening their belts and curbing their spending. It’s true of France and the UK too, with Germany perhaps Europe’s only shining star at the moment.
You would expect this to be the time for discounters to come to the fore. Of course, they already command the lion’s share of the grocery market in Germany, where even in the good times citizens take pleasure in patronising the thousands of those price-conscious outlets. Discounters are gaining across Europe, taking market share bit by bit every year.
But shoppers can be contrary types, as the latest results from Tesco have shown. The food retail giant, which commands more than one-third of the grocery market in the UK and has stores in central Europe, Asia and North America, warned bleakly of plunging profits in its UK business. Crucially, that is the part of the company that really stokes its growth overseas.
Large numbers of UK shoppers have evidently been turned off by Tesco’s low price–low service mix. We Britons expect something more from our food retailers and it seems many are still prepared to pay good money to get it. Indeed, results at that resolutely upscale outfit of the UK high street Waitrose have been improving notably. It provides excellent service, but it demands a higher price for its food as a result.
An economist once drew a correlation between recessions and lingerie sales. The word is that sales of fancy bra-and-knicker sets boom at times of economic downturn. This may be just an urban myth, but it contains within it some important lessons for our trade: by all means supply the discount end of the business, but don’t forget that shoppers are prepared to pay good money for quality and speciality.
Europe’s ongoing crisis is teaching us many things: the value of thrift, the necessity of budgeting, the importance of management, and the fact that shoppers behave in some very unexpected ways. Businesses that do well will be the ones that manage to capture an advantage in every one of these areas.
