In this instalment, our UK analysts offer their take on some of the market’s latest developments and initiatives. Here’s what you need to know about:

• With the Middle East war continuing, IGD looks at how resilience is key for businesses

• Co-op reports 2025 sales down following cyber-impact

• Asda reports annual sales decline for second year in a row

• Morrisons is aiming to boost engagement with the More Card app gamification

• Sainsbury’s partners with Foodsteps to reduce supply chain emissions

• Morrisons partners with Wilko to bring DIY range to supermarkets

• M&S equips 11,000 colleagues with generative and agentic AI

Middle East briefing: resilience now critical

The conflict in the Middle East is already doing what geopolitics so often does to the food system: transmitting shock through energy, freight and confidence, and into costs. Before the conflict escalated in the Middle East, IGD forecast that food and drink retail inflation in 2026 would average 3.3–4.3%, with around 3.8% most likely.

To understand how the conflict could alter the outlook, IGD has developed two illustrative inflation scenarios. These are structured assessments designed to show how food inflation might respond under different energy price shocks.

Head of Resilience, Matthew Stoughton-Harris’s view: it is clear this is an evolving situation, and businesses must remain agile and keep a watching brief on how it develops hourly and daily. As the war and its impacts evolve, we are working on a practical framework to improve commercial outcomes. However, in the short term, it is clear that there are three distinct areas that businesses can tackle: to identify risks, assess their preparedness, and identify the actions that they can take.

For more insight on the topic, see our ongoing coverage of the war and its impact on our Economics page.

Co-op reports 2025 sales down following cyber-impact

Convenience retailer and wholesaler, Co-op, has announced full-year performance figures for 2025, highlighting the disruption caused by the malicious cyber-attack it suffered in Q2. Reporting sales in its food retail business fell 2.0% to £7.25 billion, Co-op has stated that net of the cyber impact, turnover would have been up 1.0%.   However, in contrast, within the food retail business, quick commerce sales continued to grow quickly, rising by 15% to £534 million.  Like the retail division, Co-op Wholesale (formerly Nisa) also saw sales fall, down 2.2% to £1.3 billion. Despite the decline in Co-op’s trading performance over the year, membership continued to grow, reaching 7.2 million, increasing by 1.7 million, a rise of 17%.

Insight Partner, Patrick Mitchell-Fox’s view: the increase in Co-op membership was one positive story in what was a year of uphill struggle for the business, showing that its focus on initiatives like member pricing is at least positively boosting shopper engagement.  However, even allowing for the cyber-impact, underlying trading in the Co-op retail business was relatively weak versus the wider market, indicating that it faces some broader challenges in the trading environment affecting convenience retailers more widely.  One factor is certainly declining tobacco sales which continued to fall sharply throughout the year proving a drag on both Co-op’s retail and wholesale channel business.

Asda reports annual sales decline for the second year in a row

Asda reported total sales (exc. fuel) declined 3.3% to £21.0 billion for the year ending 31 December 2025. Like-for-like sales declined 3.1%, an improvement of 0.3 percentage points. The retailer’s Adjusted EBITDA (after rent) declined 33.1%, while net debt was reduced by £500 million to £3.1 billion. Like-for-like sales for the first three months of 2026 are improving, standing at -1.6% in January, -1.0% in February and +1.2% in March.

Senior Insight Analyst, Alex Rowberry’s view: these results were expected in a year that saw the turbulent completion of Asda’s Project Future IT transformation and a poor performance at Christmas. Like-for-like in-store sales growing in February and March provide a glimmer of hope for Asda. Any turnaround in market share will only be achieved once its core large estate is delivering meaningful growth.

Morrisons is aiming to boost engagement with More Card app gamification

Morrisons has added a gamification feature to its More Card app as it targets greater engagement with shoppers over the Easter period. The Easter Mix & Match interactive game is running from 26 March to 4 April. Shoppers are rewarded with free daily treats and the chance to win one million More Points, worth £1,000. Prizes range from Market Street hot cross buns to Cadbury’s Crème Eggs and daffodils.

Senior Insight Analyst, Alex Rowberry’s view: anyone familiar with Lidl’s gamification features on the Lidl Plus app will find many similarities with Morrisons Easter Mix & Match game. Morrisons will be hoping to replicate the success in deeper loyalty and higher repeat store visits that Lidl has seen with Lidl Plus.

Sainsbury’s partners with Foodsteps to reduce supply chain emissions 

Sainsbury’s has partnered with sustainability data firm Foodsteps to measure and reduce the environmental impact of its supply chain, supporting its goal of reaching net zero across its value chain by 2050. Foodsteps will build a detailed and auditable data system, giving the retailer a clearer view of the environmental impact of its full product portfolio. With this insight, Sainsbury’s will have the visibility to target emissions hotspots and work more effectively with suppliers. The initiative is part of the retailer’s “Plan for Better” strategy, which aims to embed sustainability more deeply across its operations.

Supply Chain Analyst, Soline Duriez’s view: Sainsbury’s is leveraging data to drive action and move beyond broad climate targets. Better product-level data will reduce risk and help the retailer focus efforts where they matter most. As sustainability expectations keep rising, strong data foundations will become a real advantage in the market.

Morrisons partners with Wilko to bring DIY range to supermarkets

Morrisons has partnered with Wilko as it builds on its strategy to provide shoppers with “more reasons to shop at Morrisons”. The first concession opened in Morrisons Speke store in Liverpool, with up to 20 planned for 2026. The bays, branded in Wilko’s colour scheme, will hold a range of DIY products including paint, car accessories, decorating tools and household essentials.

Senior Insight Analyst, Alex Rowberry’s view: the move signals Morrisons’ intent to reshape its store proposition, replacing under-performing cafes, florists, pharmacies and meat and fish counters with partner brands that can deliver stronger returns. Recent partnerships with Holland & Barrett, The E‑Cig Store and SpotlessWater highlight the pace of the shift. Limiting to 20 concessions suggests Morrisons is gauging shopper engagement before committing to a wider roll-out.

M&S equips 11,000 colleagues with generative and agentic AI

M&S has purchased 11,000 Microsoft 365 Copilot license, in a bid to improve customer service and accelerate its digital transformation. This technology will be available to every store manager and support centre colleague, as well as a customised training programme. M&S has stated the AI tools will assist in time-consuming day-to-day tasks, such as compiling sales insights, summarising meeting notes, creating rotas, and preparing handovers. M&S consider the integration of AI in its everyday time-consuming tasks to allow colleagues more time to support shoppers and shop floor teams. The partnership is considered another step in the direction of modernising its operations.

Analyst, Seth Russell’s view: the implementation of AI in stores in this way signals a smart move to begin shifting towards full integration of AI in stores. It is likely that there will be teething problems during the initial activation of this and will require a learning curve for the store managers and support centre colleagues, but with time it will allow for fast access of data and insights. The main goal of this is the improvement of efficiency in operations, which it will likely achieve quickly after training. This main goal segways into a nicer goal, improving the shopper experience by giving them more facetime with store staff and faster access to assistance.  

 What to read next: Q1 Europe: Brand innovation & retail activation highlights

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