Changes In Promotion Strategies And Euros Help Supermarkets Record First Sales Growth For Nearly A Year

Less promotions, edited ranges and a drop in shoppers buying cheaper grocery brands, have helped the supermarket sector record its first genuine increase in year-on-year takings at the tills since July 2015, according to latest Nielsen retail performance data.

During the four weeks ending 18 June 2016, the value of sales was up 0.4% versus the same period a year ago, boosted in part by an uplift in sales of alcohol and crisps following the start of the Euros. The last time sales value increased year-on-year (excluding an Easter-inflated period) was the four-weeks ending 18 July 2015. Furthermore, it’s only the third genuine year-on-year rise since the start of 2014. Sales volume remained flat (0.0%) for the second consecutive period.

nielsen-market-shares-june16a“It remains a tough trading environment for the big supermarkets but changes made over the last year in lowering prices, less promotions, edited ranges and improved customer service seem to be having an impact, alongside the drop in shoppers buying cheaper grocery brands to save money,” said Mike Watkins, Nielsen’s UK head of retailer and business insight.

“Furthermore, deflation is no longer deepening and, with the effect on figures of some store closures last year soon to be behind us, we can be more optimistic about a supermarket recovery later this year.”

The amount of the average supermarket shopping bill going on promotional items has remained at 29% for three months and Watkins observed: “With Sainsbury’s proactively leading the move to permanent price cuts and away from ‘multi-buy’ offers, it looks like the industry is attempting to make this the new baseline for promotional spend.”

Meanwhile, the first week of Euro 2016 helped Beers, Wines & Spirits sales increase 6.2% year-on-year during the four-week period, whilst Crisps & Snacks rose 4.2%. In addition, the warm end to May contributed to Delicatessen sales rising 3.9% and General Merchandise increasing 2.9%.

On the other major European event this month, Watkins commented: “Whilst the Brexit decision is unlikely to change shopper behaviour in the short term, we can expect some change in consumer sentiment and, possibly, a return to low inflation next year – should sterling’s depreciation continue and global commodity prices strengthen. However, for now, the battle for market share continues and shoppers will benefit from falling prices at food retailers due to price cuts and the deflationary environment.”


NAM Implications:
  • Key will be the reluctance of consumers to accept higher prices, resulting in increased moves to discounters/private label…
  • With price cuts the only real option for brands…
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