Bank Of England Expects Food Inflation To Hit 5.5% This Year

After cutting interest rates yesterday, the Bank of England warned that climbing food prices will cause inflation to surge even higher in 2025.Economists at the Bank blamed rising food prices on several factors, including changes to packaging regulations and increased labour costs, as a higher proportion of workers in the retail sector are paid the national living wage, which the Chancellor Rachel Reeves increased by 6.7% in April.

They also blamed higher employment taxes announced in the Autumn Budget, saying: “Furthermore, overall labour costs of supermarkets are likely to have been disproportionately affected by the lower threshold at which employers start paying NICs… these material increases in labour costs are likely to have pushed up food prices.”

Responding to the Bank of England’s comments, Helen Dickinson, Chief Executive at the British Retail Consortium, said: “The Bank of England report outlines how the last Budget continues to push up food prices.

Government policy will add £7bn to retailer costs this year, from higher employment costs to the introduction of a new packaging tax. Food prices have already been climbing steadily, and the BRC has warned this is only the beginning, food inflation means poorer families being hit the hardest by the Treasury’s decisions.

“While retailers are doing everything they can to shield their customers from rising prices, their ability to absorb further costs is extremely limited. If government goes ahead with its planned higher business rates threshold for 4,000 larger stores – including many supermarkets – then it will be ordinary households who suffer the most.”

Food and Drink Federation (FDF) Chief Executive, Karen Betts, added: “Food and drink inflation is rising noticeably again and currently this shows no signs of easing.

Global energy and commodity prices are rising once more, and this comes on top of new taxes and regulatory costs, like higher employer National Insurance Contributions and this year’s new packaging tax.

Food and drink manufacturers try to absorb as many of these costs as possible to protect shoppers, but the fact is that making food and drink in the UK is more and more expensive to do.

“It’s critical that government takes decisive action to cut red tape and promote growth and investment across the food and drink sector, including ensuring there are no further cost increases to businesses in our sector in the autumn Budget.”

NamNews Implications:

• Meanwhile, consumers are driven by perceived inflation…
• …especially for food.
• (and more government-caused cost increases in the pipeline)
• A perception that it is more than the official stats.
• Anyone in real doubt, try doing the household shopping, alone for a few months…
• ...and study the actions of fellow shoppers.
• Anticipate increased switching to own-label equivalents and discounters.

Asda Launching New Customer Insight Platform That Supports Evolution Of E-Commerce Category Management

Asda is preparing to launch a new customer insight and collaboration platform, created in partnership with eStoreBrands, an e-commerce data analytics specialist.

According to trade publication Retail Week, Asda Xpert will launch next week with the aim of helping the supermarket group and its suppliers “understand and more effectively meet the needs of its online shoppers”.

A source is quoted as saying that the new platform will provide brands with “advanced data-driven insights, enabling them to optimise product performance, track market trends, and make smarter category decisions for Asda.com”.

The new platform will also “integrate digital shelf analytics and real-time performance data” in order to help “suppliers drive mutual category growth and improve decision-making”.

It is claimed that Asda Xpert will be a major step forward in the “evolution of e-commerce category management” and will provide brands with the tools they need to “maximise growth, optimise strategies, and better serve customers in an increasingly competitive online retail space”.

Barney Burgess, Asda’s VP of Online, told Retail Week: “We’re really excited about this new partnership between Asda and eStoreBrands. Leveraging an e-category management approach, Asda Xpert will enable brands to identify new insights from our data, driving more informed actions which will accelerate growth for the brands as well as Asda.com”.

eStoreBrands’ VP of product strategy, Francis Nicholas, added: “Having spent years working for brands like P&G and Nomad Foods, I know first-hand how valuable this kind of insight is.

When working with retailer buying, category, and ecommerce teams, this was the type of solution which was missing. Partnering with Asda on Asda Xpert is incredibly exciting, and we look forward to supporting brands in making data-led decisions that benefit both suppliers and Asda.”

NamNews Implications:

• Asda are patently pressing all the right buttons.
• And innovating with leading-edge tools.
• The key issue remains that of sufficient EBITDA improvement…
• …fast enough to beat the clock.
• Fingers crossed.

Sainsbury’s Shakes Up Management Team

Sainsbury’s has made new appointments and reshuffled its existing leadership team to support the delivery of the group’s ‘Next Level’ strategy.

Tracey Clements will join the retailer at the beginning of September in the role of Chief Retail, Logistics and Supply Officer. The newly created position unifies Sainsbury’s Retail, Digital, Customer Experience, Supply Chain and Logistics activities under a single leadership.

Clements’ past experience includes 17 years with Tesco, where she held a number of leadership roles, including Store Director, Managing Director of Tesco Express, and CEO of One Stop. She then became Chief Operating Officer for Boots UK & Ireland, and most recently, was Senior VP of Mobility and Convenience Europe at petrol forecourt operator BP.

Meanwhile, accountability for Technology at Sainsbury’s is moving to Mark Given following the recent departure of its Chief Retail and Technology Officer, Clodagh Moriarty, to homewares chain Dunelm.

Given will become Chief Technology, Marketing and Data Officer from 1st September, supporting Sainsbury’s drive to utilise technology and AI in delivering “outstanding customer experience, leveraging the power of data and insight and unlocking future opportunities at scale.”

Rob Barnes will join Sainsbury’s in early October as Chief Technology Officer, reporting to Given. Barnes left Asda in April, having supported the group’s ‘Project Future’ IT separation from its previous owner, Walmart.

Sainsbury’s also confirmed that Rhian Bartlett will become its Chief Commercial and Sustainability Officer in an expanded role, bringing together the group’s commercial and sustainability agendas under a single leadership. The retailer stated that by aligning commercial and sustainability leadership, it was “embedding sustainability at the heart of commercial decision making – ensuring both areas come together to support long-term value creation and environmental leadership.”

Meanwhile, Graham Biggart has been appointed Managing Director for Argos and Chief Strategy Officer. The move will see the chain’s retail and transformation teams report directly into Biggart, enabling an “even sharper focus on delivering the More Argos, more often transformation plan and accelerating Argos’ growth”.

Biggart will continue to hold accountability for shaping the group’s future strategy, whilst his prior responsibilities for Sainsbury’s supply chain and logistics will transition to Clements to align more closely with its retail operations and customer experience.

“I’m delighted to welcome Tracey to our Operating Board. Her breadth of experience, energy and customer-first mindset make her an outstanding addition to our leadership team, and I’m confident she will play a pivotal role in accelerating our plan and shaping the next chapter of our Sainsbury’s business,” commented Chief Executive Simon Roberts.

“Alongside Tracey, we’re strengthening our leadership across Technology, Commercial and Sustainability, all areas that are critical to delivering our Next Level strategy. With Rhian taking forward our combined commercial and sustainability ambition, Mark uniting technology, marketing and data, Graham leading our group strategy and the transformation of Argos, and Rob joining us as CTO, we’re building the momentum and the capabilities to move faster, serve customers better and unlock long-term growth across the group.”

Last month, Sainsbury’s reported better-than-expected first quarter sales, benefiting from warm weather and a disruption at rival Marks & Spencer. Its shares are up 8% so far this year.

NAM Implications:

• Anyone close to Sainsbury’s knows that these are fundamental changes and enhancements to Sainsbury’s ability to accelerate future growth in an unprecedented retail environment…
• …with potential rewards for suppliers that align with the retailer’s enhanced team.
• i.e. time to reconfigure supplier-retailer networks.
• Starting from where new and current team members have been…
• …and anticipating their thinking going forward.

Aldi To Open One New Store Every Week For The Rest Of The Year

Aldi has revealed that it will be opening an average of one new store a week in the UK between now and the end of 2025

New store locations opening in the coming months include:

• Airfields, Welsh Road, Deeside
• Rockingham Road, Market Harborough, Leicestershire
• Fulham Broadway, London
• Pacific Drive, Eastbourne, East Sussex
• Mafon Road, Nelson, Treharris
• Ashford, Waterbrook, Kent
• Commercial Street, Shoreditch, London
• Philadelphia Lane, Houghton le Spring, Tyne and Wear
• Mill Road, Meadowfield, Durham
• Pendle Drive, Litherland, Liverpool
• Ringwood Road, Brimington, Chesterfield

The discounter is investing around £650m across Britain in its store opening and refurbishment programme for 2025.

“At Aldi, our goal is to make sure people across the UK have access to affordable, high-quality food, and opening new stores is key to making that happen,” said Jonathan Neale, Managing Director of National Real Estate at Aldi UK.

“We’re now opening an average of one new store a week for the rest of 2025, showing just how ambitious our plans are to build a store network that will help us reach millions of new customers.

But it’s not just about openings – it’s also about making sure we have the best-paid teams in place to run them.”

At the end of last month, Aldi revealed that it was set to become the first supermarket in the UK to pay store staff at least £13.00 an hour as it steps up its recruitment drive to support its expansion plans.

NamNews Implications:

• That’s 20 new stores in anyone’s language…
• …for a discounter growing sales and market share.
• Time for suppliers in many categories to question whether they are doing enough to access and maintain their fair share of Aldi business, going forward...
• Worth a look?

Asda Closing In On Major Property Deal That Will Boost Recovery Funds

Asda is reported to be in advanced talks about a £400m deal to offload some of its real estate assets to an investment house to help fund its turnaround plans.

According to Sky News, Blue Owl Capital, a New York-listed asset management group, has emerged as the frontrunner to buy roughly 20 Asda supermarkets and lease them back to the struggling retailer. Sources indicated that a deal could be formally agreed upon within weeks.

Asda has undertaken sale & leaseback deals in the past, notably in 2023 when it struck a £650m deal with US-based Realty Inc.

A spokesperson for the retailer declined to comment on the talks with Blue Owl Capital but said: “Sale & leaseback [transactions] have been a feature of the retail industry for many years.

“While maintaining a strong freehold base remains central to Asda’s property strategy, we will consider suitable opportunities to unlock value from our property portfolio as part of our material programme of investment into the business.”

While sales at Asda are still in decline, recent industry data suggests that there are signs of recovery after significant investment in cutting prices and improving its offering.

NamNews Implications:

• Sale & leaseback represents a capital gain for a struggling business.
• But it can add an additional rent burden…
• Asda need the money but is obviously intent on keeping sale & leaseback to a minimum.
• (keeping in mind an exit strategy that will optimise the ‘eventual’ sale/refloat of the business)
• Meanwhile, fingers crossed…

Supermarket Price War Impacting Profits At Iceland

Intense price competition in the supermarket sector is impacting profit growth at frozen food specialist Iceland.

According to The Telegraph, the retailer has recently informed bondholders that its underlying profits increased by only 0.6% to £317.6m in the year to the end of March 2025, compared to a 24% rise in the prior year.

Revenues were largely flat at £4.2bn, although its previous financial year – when sales rose 6.6% – was boosted by an additional trading week. On a comparative 52-week basis, sales were up 3% this year.

The report noted that the profit slowdown follows Iceland pushing to keep prices lower as supermarkets battle to attract cash-strapped shoppers.
Iceland has been stepping up its programme of multibuy promotions.

This meant that while the number of items it sold last year increased by 5.3%, it did not see a rise in value sales.

Credit rating agency Fitch said shoppers continued to turn to Iceland for value “despite heightened competition”. However, its market share has remained relatively flat in recent years at around 2.3%, with latest industry data from Worldpanel by Numerator showing the group’s sales grew only 2.8% over the 12 weeks to 13 June, well behind the leading supermarket multiples and discounters.

Fitch added: “We expect Iceland’s product offering to remain competitive for UK food consumers with weaker spending power.”

However, the credit ratings agency raised concerns over Iceland’s profitability, suggesting the chain would have to continue investing in price cuts at a time when it is battling higher costs. Fitch said: “The company, along with other UK-based retailers, will be hit by the rise in National Insurance and minimum living wage contributions from [this year], which we estimate will result in an additional cost of £50m.”

Iceland’s Chairman, Richard Walker, said earlier this year the National Insurance hike had “added greatly to the cost of business”.

Meanwhile, Iceland’s Chief Executive, Tarsem Dhaliwal, said in April that the company was bracing for surging food costs. Speaking to trade publication The Grocer, he noted that the biggest concern was rising prices being imposed by its suppliers.

He said: “The reality is that we have to be conscious of the fact our suppliers are going to pass the costs onto us, literally straight away. We can’t absorb all that, I don’t think any retailer can, so there’s going to be food inflation.”

NamNews Implications:

• Consumers are shopping around for value via a combination of promos and own-label ‘equivalents’.
• i.e. business is there for the asking…
• …meaning Iceland have had to take a hit on profits to attract their fair share.
• With more cost increases in the pipeline…
• …Iceland are signalling the inevitability of having to raise shelf prices.

Asda Planning Major Upgrade To Stores In Yorkshire

Asda has marked Yorkshire Day (1st August) by unveiling a major store investment programme in its home county as part of its drive to improve the in-store experience for its customers.

The struggling supermarket is investing £7.2m to upgrade stores in Kingswood, Harrogate, York, Pudsey, and Keighley by the end of 2025.

Each store included in the programme will benefit from full shop floor refurbishments, including a “simpler and more intuitive” layout, as well as new lighting and signage – all designed to modernise the shopping space.

An additional £4.6m will be invested in two stores in the surrounding area – Grimsby and Stockton – with the retailer aiming to extend the programme to more UK locations next year.

Work will begin in most stores in September and is expected to take around seven weeks per store.

“We’re proud to continue investing in the communities we serve – especially in Yorkshire, where our story began 60 years ago,” said Liz Evans, Chief Commercial Officer – Retail and Non-Food.

“Following the successful refurbishment of our Pilsworth store earlier this year, we’re pleased to share our plans to modernise these Yorkshire stores and further enhance the shopping experience.”

While sales at Asda are still in decline, recent industry data suggests that there are signs of recovery after significant investment in cutting prices and improving its offering.

NamNews Implications:

• Logical for Asda to invest in its stronghold.
•  And if they can make it work there, they can make it work anywhere…’
• Hopefully....
• But the real issue is Asda’s fight against the clock…
• …as stakeholders await the EBITDA 'bottom line' impact.

Lidl Overtakes Morrisons In Food & Drink Share Ranking

Lidl is now the UK’s fifth-biggest supermarket in terms of food and drink sales, overtaking Morrisons.

According to Worldpanel data seen by trade publication The Grocer, the discounter’s share of sales of fresh, chilled and ambient groceries, but excluding alcohol, household, toiletries and healthcare, was 7.7% over the year to 13 July, compared with Morrisons’ 7.6%.

The report said that Lidl’s food and drink share had risen from 7.3% in the previous 52 weeks, after its sales grew by 10.1%. In contrast, Morrisons’ food and drink share has fallen from 7.8% after its sales only rose by 1.5%.

The Grocer noted that the food and drink figures are different to those included in Worldpanel’s monthly published market update, which covers all expenditure through store tills, excluding petrol and in-store concessions.

Those figures show Morrisons narrowly retaining its lead, with a market share of 8.4% over the 12 weeks to 13 July, compared with Lidl’s 8.3%, which was a record for the discounter after another strong period of growth.

The report said that Lidl is likely to overtake Morrisons in those numbers in the new year, given its expansion plans. The discounter recently revealed that it will open its 1,000th store in the UK this November, 31 years after making its market debut.

Responding to the figures published by The Grocer’s, a spokesperson for Morrisons is quoted as saying: “The numbers are partly a function of new supermarket openings, where we haven’t added new space for some time, and the survey doesn’t capture all of the growth we are seeing in convenience and wholesale, and our Myton manufacturing business.”

A spokesperson for Worldpanel added: “We do not publish retailer market share data for select categories. Our grocery market share release provides a full view of grocers’ performance, including all expenditure through store tills except petrol and in-store concessions.”

NamNews Implications:

• Overtaking Morrisons’ share of sales of fresh, chilled and ambient groceries will not go unnoticed where it matters.
• Especially in Lidl and Morrisons organisations.
• With the likelihood of Lidl overtaking in the headline market share numbers in 2026, Morrisons will have a cause of even greater concern.
• At which point, suppliers may begin to weigh their options regarding the relative levels of investment in either retailer.
• A pointer for all…

Supermarket Loyalty Waning

Reward, a customer engagement and commerce media specialist, has unveiled new consumer spending insights that confirm a continued decline in brand loyalty among UK grocery shoppers.

The data shows switching behaviour among shoppers has accelerated since 2023, with June this year marking a new high – 41% of consumers moved away from their primary grocer. Discounters are benefitting most from this shift as shoppers manage their budgets, claiming a market share of 20% in June, higher than their 2025 average of 19.3%.

Meanwhile, cross-shopping is now the norm, with 80% of consumers using two or more grocers in June and the average shopper visiting 3.2 different grocers.

Reward noted that these behaviours reflect the growing importance of price, availability, and perceived value in shaping grocery choices – key themes explored in its newly released report – The Trends Reshaping Grocery Spend – which analyses six years of evolving consumer behaviour.

The insights highlight a series of trends that have become firmly embedded in how UK consumers shop for groceries. Key takeaways include:

• Top-up shopping dominates: In 2025, 67% of grocery transactions were smaller, frequent shops – up from 61.5% in 2019. The big weekly trolley shop is increasingly being replaced by ‘little and often’ purchases that reflect immediate household needs.
• Online is embedded: Online grocery shopping accounted for 11.4% of spend in June, a figure that has remained stable post-pandemic, indicating online is now a standard channel for all types of shopping missions, not just a contingency.
• Value is more than price: While discounters gain ground, full-range grocers that invest in personalised supermarket loyalty schemes and convenient multichannel experiences have maintained around 42% of market share since 2019. Consumers are weighing price alongside quality, convenience, and the benefits offered through loyalty.

Paul Jones, SVP data & insights at Reward, commented: “Our insights confirm a key trend that’s been building: loyalty isn’t dead – it’s evolving, and it must be earned. Grocers can no longer depend on routine habits; today’s shoppers are selective, value-driven, and quick to switch.

“In this environment, deeply understanding customer behaviour and market dynamics is more critical than ever. Retailers that harness data-driven personalisation and activate contextual spend insights through commerce media strategies will be best placed to drive meaningful engagement, long-term loyalty, and sustained growth in an increasingly complex landscape.”

NamNews Implications:

• Worth keeping in mind that the same could be said of supplier branding.
• i.e. Brand loyals now prepared to ‘shop around’ for other brands and own-label equivalents in a search for real value, rather than ‘price’.
• More inclined to identify and criticise instances of shrinkflation and skimpflation.
• ‘paying more and more, for less and less)
• And prepared to ‘tell a friend’.
• Unprecedented change, indeed…

Pepco Hires Advisors To Oversee Poundland’s Transition To New Ownership

Weeks after striking a deal to sell Poundland to investment firm Gordon Brothers, Pepco Group has hired advisers to oversee the struggling discounter’s transition to its new owner through a court-sanctioned process that will involve store closures and job cuts.

According to Sky News, the company has drafted in FRP Advisory to act as an observer, with the High Court scheduled to sanction Poundland’s restructuring plan in the last week of August.

Under the proposed deal announced in June, 68 Poundland shops will close in the short term, along with two distribution centres. The retailer is also seeking rent reductions at other sites, ending its online operation, and reducing its food offer.

More shops are expected to be shut under Gordon Brothers over time, resulting in hundreds of job losses.

Barry Williams, Managing Director of Poundland, said at the time of the deal’s announcement: “It’s no secret that we have much work to do to get Poundland back on track.

“While Poundland remains a strong brand, serving 20 million-plus shoppers each year, our performance for a significant period has fallen short of our high standards and action is needed to enable the business to return to growth.

“It’s sincerely regrettable that this plan includes the closure of stores and distribution centres, but it’s necessary if we’re to achieve our goal of securing the future of thousands of jobs and hundreds of stores.”

NamNews Implications:

• Poundland’s restructuring plan is both logical and essential…
• …the only realistic way of moving forward.
• i.e. Poundland has to be cut to fit available demand, as a basis for recovery and growth.
• Hopefully all stakeholders will share that view…