12/11/2010
Businesses are benefiting by what has been labelled the 'X Factor effect', in which people are choosing to save money and stay in watching the popular TV show, giving retailers a boost in ready meal sales.
As reported by The Independent, the chief executive of Sainsbury's said that their Taste the Difference range had seen a sharp growth in sales which he believes highlights a preference for eating in rather than going out for dinner.
"People are staying in rather than going out to eat," said Justin King, chief executive of Sainsbury's. "People are watching the X Factor and other TV shows but they're eating well while they're doing it."
This was supported by Gemma Lovelock, a retail analyst at TLC Marketing Worldwide. She said: "People are not just eating more at home, they are also drinking more at home and the supermarkets generally are benefiting from this behavioural shift."
"Instead of spending money on big-ticket items on the high street, consumers are spending more on premium food products in the supermarkets, and indulging in good food at home rather than eating out."
This is good news for businesses that supply goods to supermarkets and other retailers. The sudden increase in demand for such premium foods and related products might leave suppliers stretching their resources in order to fulfil growing order books. However, through sales finance for example, a quick boost to cash flow would allow businesses to temporarily grow their production power through hiring temp staff or extra equipment to meet the increasing number of orders.
With just six weeks left of the X Factor, companies have a limited period in which to make the most of this boost to business and it would be a shame to pass such an opportunity up because cash flow is strained.
Laura Nineham