Supermarkets have dragged down growth in the UK’s top 350 companies, with revenues in food retail sinking below £100bn for the first time since 2010.
Collective food retail revenues dropped by 3 per cent to £99bn between April and June 2016, according to The Share Centre’s Profit Watch UK study, while overall revenues of the UK’s top 350 companies fell by 2 per cent to £341.7bn.
Overall operating profits of the UK plc dropped by 3 per cent to £27.1bn in the second quarter, driven largely by the weak performance of the food retail sector.
Helal Miah, investment research analyst at The Share Centre, said that intense price pressure and competition from discounters have made it a difficult time for Britain’s supermarkets.
He commented: “It has been a tough couple of years for UK plc, battling against global economic headwinds and sector-specific problems that have beset commodities, energy, and food retailers.”
Sainsbury, Tesco and Morrisons have all seen their profitability decrease, as the Big Four supermarkets continue to lose customers to burgeoning German retailers Aldi and Lidl.
And the growth of online grocer Ocado, as well as the emergence of AmazonFresh, look likely to make price competition even fiercer.
Milah warned that economic uncertainty, triggered by the EU referendum result, could also harm retailers’ sales. He said: “The implications of the economic slowdown will mean lower demand for sectors such as housebuilders and retailers, while the travel industry is already feeling the effects.”
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