More than half the UK's food retail financial directors expect sales and profits to fall in the next year, a new survey has revealed.
Despite the big four reporting healthy sales and profits growth, FDs painted a grim picture of the year ahead. A full 55% expected sales to fall and 60% thought profits would be down year-on-year. A similar percentage expected to lay off staff in the next year.
Strategy consultants Roland Berger spoke to 110 FDs from companies with a turnover of £250m or more working across all retail sectors. Food FDs took a gloomier view than the overall survey, which showed 37% of directors predicted falling sales and 36% expected a drop in profits.
"The strong have been getting stronger this year, as was shown in the results of the big multiples," said Roland Berger's Tim Manasseh. "Elsewhere in the industry the picture isn't so rosy, although food and drink does still seem resilient. It is a cautious sector, so it's not surprising that it's taking a cautious view of the year ahead."
Food FDs reported a stronger performance in 2008 than retail FDs overall. Only 25% of food FDs said sales had fallen in 2008, compared with 43% overall, and 25% said headcount was down compared with 42% in the overall survey. When it came to profits, however, 45% of food FDs reported a drop compared with 43% overall.
The sole source of optimism for food FDs came in their prediction that their businesses would return to growth in nine months - two months ahead of other retailers.
Some 90% of food FDs said consumers were switching to cheaper retailers and 60% felt they were downtrading from premium to discount brands.
"This is clouded by the focus on the discounters, which actually make up only a small share of the sector," said Manasseh. "The main discounting activity is elsewhere, in the major multiples."
The results also suggested food FDs were planning a cautious year, with 90% revealing they planned to cut debt over the year.
Despite the big four reporting healthy sales and profits growth, FDs painted a grim picture of the year ahead. A full 55% expected sales to fall and 60% thought profits would be down year-on-year. A similar percentage expected to lay off staff in the next year.
Strategy consultants Roland Berger spoke to 110 FDs from companies with a turnover of £250m or more working across all retail sectors. Food FDs took a gloomier view than the overall survey, which showed 37% of directors predicted falling sales and 36% expected a drop in profits.
"The strong have been getting stronger this year, as was shown in the results of the big multiples," said Roland Berger's Tim Manasseh. "Elsewhere in the industry the picture isn't so rosy, although food and drink does still seem resilient. It is a cautious sector, so it's not surprising that it's taking a cautious view of the year ahead."
Food FDs reported a stronger performance in 2008 than retail FDs overall. Only 25% of food FDs said sales had fallen in 2008, compared with 43% overall, and 25% said headcount was down compared with 42% in the overall survey. When it came to profits, however, 45% of food FDs reported a drop compared with 43% overall.
The sole source of optimism for food FDs came in their prediction that their businesses would return to growth in nine months - two months ahead of other retailers.
Some 90% of food FDs said consumers were switching to cheaper retailers and 60% felt they were downtrading from premium to discount brands.
"This is clouded by the focus on the discounters, which actually make up only a small share of the sector," said Manasseh. "The main discounting activity is elsewhere, in the major multiples."
The results also suggested food FDs were planning a cautious year, with 90% revealing they planned to cut debt over the year.
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