David Richardson: How will supermarkets respond to the credit crisis?

The main preoccupation of 600 food trade bosses and executives at the Institute of Grocery Distribution conference last week was the collapse of the world’s financial system. What will it do to demand? How will buying habits change? Would delegates still have a job by Christmas?

As was pointed out, they should feel fortunate to be in the food industry rather than banking. People will have to eat something every day even if they choose cheaper alternatives from those to which they have, after 62 consecutive quarters of economic growth, become accustomed. The trick is to anticipate how consumers will react and adapt quickly.

According to IGD chief executive Joanne Denney-Finch, consumer behaviour has already changed. A recent survey by IGD suggested many were being more selective, shopping around and spending more time looking for bargains. But they were looking for value, not lower quality, she said.

Many were saving money by buying local fresh foods, not always from the supermarkets so heavily represented at the event. The survey suggested more animal welfare-friendly goods were being bought. Some 22% of shoppers said they were taking care to avoid waste and 10% claimed to be growing their own fruit and vegetables.

NFU president Peter Kendall delivered what I thought was a well-judged presentation on “the vital role of farming in the food chain”. He pointed out that supermarkets must be aware of the reality of economics on farms and play their part in creating sustainable partnerships.

He told how low milk prices had forced half of Britain’s dairy farmers out of business, how this had led to a shortage of supplies and that we are now importing 1m litres of milk a day. In the same vein, he explained that the British pig herd had also halved and that 70% of imported pig meat was produced to welfare standards illegal in this country.

Some of those sitting around me looked at one another and muttered: “That can’t be true.” I muttered back that yes, it was true and there were plenty more examples of how supermarket buying based entirely on price had led to illogical and unfair results for British farmers. But I don’t think they believed it.

Certainly, such facts are inconvenient to most supermarkets (there are a few exceptions) who will doubtless respond to the consumer quest for lower prices at the check-out. As a Morrison’s speaker put it: “To ask us to pay above the market against a background of austerity is, to say the least, difficult.” He went on to say his company’s actions “must be good for customers, the planet and also Morrison’s”.

Others expressed similar, if more discreet, sentiments from the stage. And whatever they said about value being king, some of them, even as they spoke, were engaged in a price war with each other on the high street. So, however balanced and justified Peter Kendall’s words were, we should not expect a rush of generosity from retailers.

More from David online

  • The economy has collapsed, the price of wheat has halved in six months, the cost of fertiliser has more than doubled and it looks like next year will be a financial disaster. But look out of the window, walk into the garden, drive round the farm. Have you ever seen such wonderful autumn colours? Gold and brown and shades of red light up the countryside and, living where we farmers do, we have the first and best sight of such beauty. You can’t live on the view, but it makes austerity a little easier to bear.

  • Read David Richardson’s blog