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FOODperspective & DRINKS NEWS

Consumer insight and market update BY JASON WINSTANLEY, MOY PARK SENIOR INSIGHT AND RESEARCH MANAGER GROCERY: RESHAPING THE LANDSCAPE It is now a couple of months since the UK took the momentous decision to leave the EU and, whilst it is no surprise that the result has precipitated a (potentially relatively temporary) crisis of confidence, material effects on grocery, food service and consumer spending in general seem not to have been impacted too badly so far (1,2). However, despite all the publicity around Brexit, it is worth remembering that we are now two years into a radical re-shaping of the grocery landscape, which has had far greater and wide ranging effects on the industry than Brexit (so far) has done. When Morrisons announced, in March 2014, that they were going to cut prices in order to narrow the gap with the discounters, it signalled the start of a price war which continues to this day, and which has led to an unprecedented period of stagnant overall growth within the industry. The big four supermarkets have taken the brunt of the pain, with all four now having been in almostpermanent decline for well over a year. At the same time, discounters and, to a lesser extent, premium supermarkets, have prospered but, with a combined share of only 17% of the market (3), growth in those retailers has not been able to offset the decline in the big four. Erosion of prices across the board has been instrumental in contributing to the value decline in the market and, because prices continue to be cut as retailers launch, and react to, new campaigns, there has been no comfort in waiting for poor growth to annualise. Additionally, in a particularly vicious circle, the supermarket price cuts have been so deep that they have been a significant contributor to the ultra-low inflationary environment in which the UK has found itself for well over a year now. Traditionally, inflation has usually been a reliable, (if passive), driver of growth within the industry. And it isn’t just absolute price which is under the microscope; in a relatively recent move, several supermarkets have started to target the elimination of multi-buy deals from much or all of their offer. Whilst the days of the widespread BOGOF deal are long gone, more muted Y for £X deals have been a permanent fixture in many categories for a long time, so their sudden removal is also having an impact on growth. What we can read into all of this is that the industry is re-shaping itself, and going through some medium-term pain in order to do so, but there are plenty of positive nuances behind the negativity of the blunt headline that grocery is in decline. For instance, whilst the withdrawal of multi-buys is, in some cases, adversely affecting volume, it is driving increased frequency of purchase in many categories. Over the long-term, this may well prove to be of overall greater benefit to the industry, and there is the added benefit that fewer multi-buys may help to cut back on food waste, which is a high priority for retailers and legislators alike. Additionally, inflation is starting to creep up, and this should naturally bring some growth back to the market. So, grocery, just like Brexit, is seeing a paradigm shift but, whilst Brexit is just starting its period of transition, grocery is considerably further along the path to its re-shaped format. Sources: 1- GfK Consumer Confidence Index, July 2016; 2 – Based on publicly available credit card spend data; 3 -Morrisons press release, March 2014; 4 – Kantar Worldpanel 52 weeks to 17th July, 2016 8 364• •Ulster UlsterGrocer Grocer| JANUARY | JANUARY2011 2011



ost businesses process personal data and must operate within the Data Protection Act 1998. Like many of our laws, this is based on EU law and was updated with additional obligations for businesses, which come into effect in May 2018. In light of the recent Brexit decision, many businesses are questioning the validity of these Data Protection laws, and if this means that these new regulations can be ignored. It is no doubt one of the most expensive legislative regimes, given the administrative cost of compliance, enforcement and potential fines. Leaving the EU does not mean that EU laws, including regulations around data protection, no longer apply. The vote to leave has no legal effect per se; it is an instruction to the UK government to leave the EU, which must be negotiated in an orderly way and could take several years. So it’s therefore vitally important that businesses keep up to date with their legal obligations in relation to Data Protection. Earlier this year, The General Data Protection Regulation updated and harmonised data protection law in the EU, with an increase in obligations in respect of personal data. Key changes under the Regulation are: • Expanded territorial scope meaning that non-EU businesses that control and process personal data may be subject to the Regulation in certain circumstances • Increased enforcement powers with a maximum fine ceiling of €20M • Increased compliance obligations, requiring a designated data protection officer, and data breach notification • Obligations on data processors • Privacy by design and default • Subjects’ rights to erasure and to object to profiling So, in the short term, all EU laws will continue to apply. In the longer term, the updated Data Protection Regulation is also likely to have effect. Apart from the Regulation’s potential application outside the EU, the UK will want to continue to trade with the EU. It must therefore be considered an ‘adequate jurisdiction’ for data protection, such as Andorra or Israel. And this would require the UK to be aligned to the new Regulation. Presumably the UK’s new trading partners will also require assurances on data protection. It may be better to implement the Regulation wholesale, which is something the EU already accepts, rather than try to re-invent the wheel. On a practical level, it is in businesses’ interests to have the Regulation or equivalent data protection regulation in place. The threat of hacking and other forms of cyber crime increases daily. Implementing a data protection regime is an important part of managing the cyber risk which most, if not all, businesses now face. The Regulation comes into effect on May 25, 2018, and businesses have a two-year lead in time to comply. This may involve a considerable amount of work to have practice, policies and procedures in place. So, I would urge businesses to start now rather than a take a risky ‘wait and see’ approach.

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