Latest data from Kantar shows that grocery price inflation dropped to 12.2% over the four weeks to 3 September, its lowest rate in over 12 months. Take-home sales at the leading UK grocers rose by 7.4% year-on-year, a slight increase on the 6.5% rise reported last month.
Grocery price inflation has now fallen for six months in a row, but Fraser McKevitt, head of retail and consumer insight at Kantar, noted that 12.2% won’t be a number to celebrate for many households.
He said: “Our data shows that 95% of consumers are still worried about the impact of rising grocery prices, matched only by their concern about energy bills. After a full year of double-digit grocery inflation, it’s no surprise that just under a quarter of the population consider themselves to be struggling financially – although this is a very slight drop compared to May.”
The discount retailers continue to benefit from the inflationary conditions, with Aldi’s sales this month growing by 17.1% and Lidl’s up 16.0%. Between them, the discounters now control 17.7% of the market.
McKevitt commented: “We’re now marking one year since Aldi became the fourth largest supermarket in Britain, and alongside Lidl, it has made some of the biggest market share gains over the past 12 months as consumers continue their hunt for value.
“We expect this performance to continue as inflation remains stubbornly high. However, growth rates for both the discounters have been slowing in recent months as they annualise against rapid rises last year.”
Own-label sales grew again by 9.9% in the latest month, and supermarket lines now make up over half of everything grocery shoppers buy, up from 48% in August 2013. This is equivalent to a £3bn shift in sales away from brands.
McKevitt also noted that the discounter model of offering everyday low value and fewer promotions has caught on in the wider market, with only 26% of spending now on deals compared with 38% ten years ago.
Wilko has been the latest casualty of the struggling high street, with all of its stores now set to shut by early October after the collapse of a potential rescue deal. McKevitt commented: “Shoppers have been making the most of Wilko’s closing sales, with its share of non-food groceries like toiletries, healthcare and household goods jumping from 1.8% in July to 2.3% in August. However, its sales are still down on last year and consumers are going elsewhere. Tesco, Aldi and the bargain stores, such as Poundland, B&M and Home Bargains, have been the biggest winners of customers switching spend away from Wilko.”
Sainsbury’s and Tesco were the fastest-growing traditional supermarket retailers this month, with their sales up by 9.1% and 9.3% respectively. Both chains made market share gains, with Tesco’s now standing at 27.2%, up by 0.3 percentage points from last year, and Sainsbury’s at 14.8%, up by 0.2 percentage points.
Asda’s market share fell to 13.8% and Morrisons was down at 8.6% after weaker sales growth of 5.1% and 2.0% respectively. Waitrose’s sales growth accelerated to 5.6%, but its share edged down to 4.6%. Ocado also saw sales increasing faster than last month, with growth of 4.3% and market share at 1.6%.
NAM Implications:
- Worth keeping in mind that a reduction in inflation simply means that prices are rising more slowly…
- …hence Fraser’s point: ‘12.2% won’t be a number to celebrate for many households’
- Consumers are still running scared and will need good reasons to change their behaviour.
- Meanwhile, discounters grow at the expense of other retailers (and brands)…
- …and own-label at the expanse of brands.
- Meaning that brands need to counter this double whammy by finding reasons for being on discounter shelves.
- (And perhaps suppliers adding some safe level of own-label production to their branded output…)
- Tesco & Sainsbury’s 9% growth still only half the discounters’ rate and lower than inflation.
- All pointing to a need for a fundamental shift in supplier trade strategies…
