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Four potential, and very different, scenarios for UK food retail and foodservice have been set out in a new study.

The report, Eating In Vs Dining Out, explores the impact of Covid-19 and is designed to help food retail and foodservice companies plan for the future.

It sets out four scenarios that each address the possible path of the virus and performance of the economy – from a relatively manageable virus to multiple outbreaks, and an economic performance that quickly recovers to a hard-hit economy, slow to rebuild.

IGD points out that, last year, the split of consumer spend on food and drink was one-third (36%) in foodservice and two-thirds (64%) in retail. This year’s lockdown would have a dramatic impact on the balance of consumer spend in retail and foodservice, said researchers.

“Covid-19 has resulted in the boundaries between in-home and out-of-home consumption breaking down further and faster than any of us could have imagined,” said Rhian Thomas, head of shopper insight at IGD.

“The future is unpredictable; we don’t know what path the virus will take or how lockdown measures will affect the performance of markets in the medium to longer term.”

The four hypothetical scenarios set out in the report are:

  • The Great Reset: This most positive scenario sees food and drink consumption largely shift to home. Retail sales remain high, but flatten as lockdown restrictions gradually lift and people start to eat out again. Safety and hygiene in out-of-home settings have higher value for consumers and become a key factor as they choose where to eat and drink. Some changes in consumer behaviour become the norm, fuelling further development of digital channels. Eating out returns to levels experienced in 2019 in two years’ time.
  • Decade of Drift: In this scenario, the virus is manageable, but the economy takes longer to recover and the financial impact on households and businesses is severe. Companies accelerate cost-cutting and efficiency programmes to demonstrate value to consumers, resulting in lower levels of new product development. Demand for eating out among consumers is high, but many are unable to afford it.
  • Technical Isolation: The path of the virus sees businesses and consumers turn to technology and digital services, which reshapes the retail offer; online is seen as the safest way to shop. Businesses divert investment from stores and shopping is a functional activity. Eating out is also functional and severely constrained. Stores and foodservice sites that cannot be repurposed to increase online capability will close.
  • Globalisation reversed: This is the most severe scenario, combining bad outcomes for both the virus and the economy. Globalisation regresses, putting pressure on supply chains and businesses to find operational efficiency. Supply chains need extensive rebuilding; ranges change, with some products becoming seasonal or disappearing completely. For commercial foodservice, deliveries and takeaway services are almost the only option, due to increased costs and complexity.

Peter Backman, foodservice consultant and co-author of the report, said every part of the supply chain would have to be able to adapt rapidly to this changing landscape. 

“Consumer demand will drive and shape the eating in and dining out markets more than ever before, so suppliers, foodservice operators and retailers will need to react, adjust and innovate to allow for evolving scenarios. The food industry has always been fast-paced; it’s about to get faster.”