Blackfriar: Supermarkets set for another grim year of Brexit paralysis

Kantar said Bradford-based Morrisons saw sales decline 1.7 per cent
Kantar said Bradford-based Morrisons saw sales decline 1.7 per cent
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The latest Kantar figures portray a gloomy outlook for the big four supermarkets.

Yorkshire’s Morrisons and Asda were the worst performing of the big four over the past three months.

Kantar said Bradford-based Morrisons saw sales decline 1.7 per cent while Leeds-based Asda’s sales fell 1.2 per cent in the 12 weeks to November 3.

Fraser McKevitt, head of retail and consumer insight at Kantar, said it was hard to pin down why Morrisons and Asda are both underperforming.

At a time when sales were supposed to pick up, he said the malaise is due to a combination of low confidence, political uncertainty and a shaky economy.

He said a combination of all of these things is leading to a general slow performance at the big four and Asda and Morrisons are included in that.

All of the big four supermarkets saw a slow start to the crucial festive period.

Sainsbury’s and Tesco proved slightly more resilient than their Yorkshire rivals with falls of 0.2 per cent and 0.6 per cent over the 12 week period.

Analyst Clive Black at Shore Capital said he had expected to see an improvement in trading momentum in the autumn, but this hasn’t happened.

Mr Black blamed a cautious mood among consumers who are behaving as if we were in a recession, despite the UK not being in recession.

“We thoroughly expect Santa to be more important than Boris or Jezza et al by Christmas, thankfully, but the mood music for the earnings momentum of the majors going into the festive period is a little mellow,” he added.

Whatever happens in the General Election next month, we are unlikely to see any resolution to this malaise.

A Tory majority would see the UK leave the EU by January 31 and then attempt to do a trade deal in less than a year when it took Canada, Switzerland and Norway northwards of seven years to do their deals.

Indeed, the European Parliament’s Brexit coordinator Guy Verhofstadt has cast doubts that a year will be enough time.

So we would have another Brexit deadline date of December 31, 2020 - the very worst time for retailers who stockpile Christmas goods.

The UK narrowly managed to resist falling into a recession in the third quarter, but if this confusion continues, the chances are we will see negative GDP numbers in future quarters.

The alternative to a Tory majority would be a hung Parliament and the chance of a minority Labour Government.

This is looking a lot more likely after the Government’s woeful response to the floods in South Yorkshire.

Many of the affected areas are Labour strongholds that might have been tempted to vote Tory, but Prime Minister Boris Johnson’s dismissive behaviour to their plight has kyboshed that.

The news that the Brexit Party is to stand in all Labour-held seats will also split the Tory vote, making it easier for Labour MPs to retain their seats.

Labour has said it can renegotiate a new Withdrawal Agreement in three months and hold a confirmatory referendum within six months.

This also looks like wishful thinking in terms of how long it will actually take.

We would also have to rely on the remaining 27 members of the EU agreeing to another postponement.

This dreadful Brexit malaise will be going nowhere in 2020 whatever happens and Britain’s grocery sector will just have to keep ploughing on amid confusion, Brexit fatigue and deep divisions.