The specialist food and drink sector covers a variety of categories and types of stores, ranging from young, online-only retailers like HelloFresh, to traditional, store-only family-run butchers and many in-between. However, one thing seems to unify a sizeable proportion of specialist shoppers – an intimidating shopping experience, with over a quarter (28%) of those shopping at specialists in agreement. Whether it is not knowing which cuts to order from a meat counter or how to cancel a subscription, some consumers are clearly having difficulty shopping with their chosen specialist retailers.

The COVID-19 outbreak has led to considerable shifts in consumer behaviour, which we believe are here to stay. The virus has led to a sudden and severe drop in footfall in high streets across the country, with 48% of UK consumers saying they have cut back on time spent in-store since the outbreak. This third national lockdown will have seriously dented hopes by many in the sector that 2021 would provide the opportunity to get back on track. However, on the flip side is the rise in online shopping. This is a channel where many in the specialist food and drink retail sector do not play, and as a result, are losing the opportunity to re-engage with customers who have taken their spending online.

The hardest thing for many of these specialist retailers will be adapting to and leveraging ecommerce. Mintel expects that the demand for ecommerce driven by the pandemic is here to stay, and all retailers will need to have a plan for dealing with this channel. The larger players have the resources to develop ecommerce operations like we have seen Greggs do in its partnership with JustEat. However, the smaller players, which make up the majority of the sector, do not have this luxury. For these smaller retailers, joining forces with online marketplaces may be their best bet.

It is not all doom and gloom, though. The pandemic has also led to a rise in consumer interest in local shopping. With UK consumers working from home on a scale never seen before, many are using this time at home to explore their own areas. We expect this interest in local produce, shopping and communities to remain even as the pandemic fades away. Across the country, specialist sectors are found often at the heart of local communities and, as a result, are ideally placed to capitalise on this opportunity.

Key issues covered in this Report

  • The impact of COVID-19 on shopping behaviour and its impact on the specialist sector

  • How consumers shop at specialist food and drink retailers

  • The types of specialists most used in the UK

  • Consumer attitudes towards specialists

  • How satisfied consumers are with the specialists they shop at

COVID-19: market context

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It was not until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the reopening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March, and with a hoped end to all restrictions by 21 June. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

The UK’s vaccination programme started on 8 December 2020. With the Pfizer-BioNTech, Moderna and Oxford-AstraZeneca vaccines licenced for use in the UK, the government aims to offer a first dose of the vaccine to 32 million people by mid-April.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Economic and Fiscal Outlook Report. After the fall of 9.9% over the course of 2020, the scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022.

GDP is not expected to return to pre-COVID-19 levels until the second quarter of 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster than expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in the fourth quarter of 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

The current successful rollout of the UK’s vaccination scheme has enabled the country to plan a relaxation of the current lockdown over the next few months. The government announced its roadmap for ending the restrictions on 22 February. The plan is for a gradual relaxation of restrictions starting on 8 March, with the final social restrictions to be lifted by 21 June 2021. The government hopes that the cautious approach will lead to a return to more normal conditions over the summer and into autumn.

Products covered in this Report

For the purposes of this Report, Mintel has used the following definitions:

The main focus of this Report is the specialist food and drink retailers. For the purposes of this Report, we define a specialist as a retailer that makes more than 50% of its revenue from a particular product category.

Example categories are butchers, bakers, fishmongers, greengrocers, off-licences, delicatessens, health food shops and confectionery shops. We also include home shopping specialists such as Abel & Cole, Gousto and HelloFresh. We also include religion/country-specific food shops, eg Kosher or Chinese.

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