Breakfast briefing: Retail news on Brexit, supermarkets and household spend

Grocery delivery costs big four £500m black hole in profits

The UK’s big four supermarkets lose between £5 and £7 on every online order, and the more orders they attract the more they lose, according to Dan Murphy, a partner at Kurt Salmon.

Murphy warned that grocery delivery has left a combined £500m black hole in the profits of Tesco, Sainsbury's, Asda and Morrisons.

Retailers were looking to grow their online delivery businesses in a bid to justify the plan in the long term, he said.

However, he warned profitability could never match that of customers visiting stores unless delivery charges rose significantly.

BRC pressures government to keep prices low for consumers

The British Retail Consortium (BRC) has written to the Government to make sure that Brexit trade talks are focused on keeping shop prices low once the UK exits the European Union, The Telegraph reported.

BRC chairman Richard Baker has written to International Trade Secretary Liam Fox to spell out what he believes to be “an irrefutable case for a consumer-first strategy” to Brexit.

Baker argues that while most of the attention has been on exports in the post-Brexit era, the potential impact on imports could mean increasing costs for retailers and consumers.

“The retail industry is the UK’s biggest importer, and has huge experience of importing from every corner of the world. We will be engaged in a constructive dialogue with Government that will bring our experience to bear on the Brexit talks to the benefit of everyone in the UK,” he added.

Recreation lifts September consumer spending

British household spending surged 2.4% year-on-year in September, recording its fastest growth since April, The Guardian reported.

This bounceback came as people splashed out on theatre trips, hotels, restaurants and holidays, according to payments company Visa.

On the contrary, spending on clothes and shoes dropped on a year ago, revealed the figures, compiled for Visa by data company IHS Markit.

Online spending grew at the quickest rate since April, up 6% on the year, while face-to-face spending was broadly unchanged from one year earlier, edging up 0.1%.

Taking the latest three months together, Visa said momentum remained subdued as households continued to digest the result of June’s referendum on EU membership.

“It is too early to say whether the growth seen in September will continue, and positive signs return more permanently following the soft patch that began in May,” said Visa UK & Ireland managing director Kevin Jenkins.