Last week, it was announced that the bumper Christmas sales season so hoped for by retailers on the high street failed to materialise, with only a select few such as John Lewis enjoying a high measure of success during the past few weeks.
This could spell trouble for a number of chains which have suffered from a fall in consumer confidence over the past financial year, especially as experts have warned the situation is unlikely to improve any time soon.
One brand which may be feeling the squeeze is popular bakery chain Greggs. After falling consumer interest and the controversy surrounding the pasty tax earlier in the year, directors at the chain must surely have been hoping for the stress of the Christmas season to push shoppers towards stores selling convenience foods.
Unfortunately, consumers failed to take advantage of the hot snacks and filled sandwiches on offer, presumably in an attempt to save money during a notoriously expensive time of the year. As a result, the bakery chain has been forced to post a sales dip of 2.9 per cent in the five weeks to January.
However, consumer belt tightening may not be the only factor at play in Greggs’ woes. As December was ushered in by heavy downpours that saw large swathes of the country flooded, the company believes consumers were put off visiting town centres where many of their premises are based, instead frequenting out of town shopping centres or shopping online in the comfort and warmth of their own homes.
Chief executive Ken McMeikan, who will leave the chain later this year to join catering firm Brakes, says; “What we saw in the run up to Christmas this year was the most severe flooding in southern England, southern Wales, parts of Scotland and in the Midlands.
“It has certainly had an impact on our like for like sales.”
Fortunately, there was some good news for the chain during the festive season. As shoppers got into the festive spirit nearer the day, sales of mince pies skyrocketed, with the total sold over the period coming in at a record breaking 8.5 million.
Yet festive treats will not be enough to keep sales buoyant year round, especially as Greggs has warned of price increases over the next few months. With last summer’s poor harvests having a knock on effect in all areas of the food and drinks industry, Greggs is only the first of many to make this announcement.
Thanks to higher animal feed costs, the price of meat is expected to rocket, having a direct effect upon the chain’s famous Steak Bakes. Yet the staple ingredient for most of Greggs’ products, flour, will rise in price too – in fact, the cost will climb by around 25 per cent, experts estimate.
Greggs can only hope that its loyal customer base will remain onside, while expansion plans reach out to more consumers than ever before. At present, the chain plans to close 30 non-profitable stores across the UK, but will open a further 90 properties in locations such as railway stations, motorway service stations and industrial parks.
