Musgrave warns of ‘perfect storm’ brewing for consumers
The wholesale grocery distributor and owner of two of the biggest grocery chains, SuperValu and Centra, has started to see customers shop around for value and swap branded goods for cheaper own-brand versions in the last six to eight weeks, Noel Keeley said.
“If we look to September, in my view, the perfect storm conditions are coming for the consumer,” Mr Keeley told Reuters.
“You could have a situation where Covid savings are gone, summer holidays are over and they may have a bill to pay for that. Energy bills then start to come in and they’re much more significant than they used to be, kids are going back to school and you could have an interest rates increase as well.”
Tesco Chief Executive Ken Murphy told the Consumer Goods Forum’s Global Summit that it was seeing signs in its Irish stores of the same stress its main British business is experiencing. Irish inflation accelerated to a near 40-year high of 7.8% in May, with food inflation up 4.5% year-on-year.
Musgrave is “looking at every cost in the business” to absorb as much as possible, Mr Keeley said, and this includes cutting the number of deliveries to stores and trimming some product ranges where it makes sense.
It is also making sure suppliers “take a share of the pain” when it comes to price negotiations.
Mr Keeley believes the premium end of the grocery market will hold up during the period of high inflation while Musgrave’s market leading Frank and Honest coffee brand also continues to grow with no let up in people buying coffee on the go.
However he warned that that consumer confidence is fragile.
“When there’s a lot of talk about recession and challenges in the economy, all consumers tend to pull back, even the ones that perhaps have more disposable income than others,” Keeley said.