The latest NIQ Retail Spend Barometer shows shoppers in the UK spent a total of £50.2bn on FMCG products during the first quarter of 2024, an uplift of 6.2% compared with the same period last year. However, spending on Tech & Durables (T&D) fell by 2.6% to £18.3bn as shoppers cut back on large and expensive tech purchases, such as TVs, Computers and white goods.
Although consumer confidence remains cautious, NIQ noted that slowing food inflation is enabling shoppers to add more items to their supermarket shopping basket. This helped to drive minor positive volume growth throughout the quarter for the first time since the beginning of 2021. The unit growth was driven by fresh and perishable food (+6.8%) due to its faster drop in inflation. As a result of slowing price increases, despite an improved volume trend, there is a slowdown in value growth from 7.1 in the final quarter of 2023 to 6.2% in the first quarter of this year.
NIQ highlighted that the environment of shopper cautiousness remains a key influence on shopper decision-making. Private label FMCG growth continued to outpace branded growth, and 23.4% of all spend in the last quarter was sold on promotion. This is an uplift from 20.1%, which was recorded in the first quarter of 2023. “This signals a continuation of an extremely competitive environment for retailers who continue to use all available levers to persuade shoppers of their price credentials,” said NIQ.
Consumer panel data also reveals that there was a slowdown in growth for the discounters during the latest period as they annualised last year’s high growth figures. Discounters’ value growth (+4.5%) lagged behind traditional grocery retailers (+7.1%) for the first quarter since 2021.
Meanwhile, the NIQ data reveals that the T&D market’s decline (-2.6%) this year was driven by a drop in sales for Technical Consumer Goods (-4.9%), including audio and vision electronics and mobile phones as well as Home Appliances (-5.2%). This is likely a result of the economic and political environment and exacerbated by a lack of new products entering the market.
As a result, the T&D market has shifted to a replacement cycle market. The data from NIQ reveals that 31% of consumers in 2021 bought to upgrade, but this has declined to 27% in 2024. And those who have replaced items due to faults have moved from 41% to 46%. Within T&D, key categories such as TVs, computing and white goods all continue to experience sales declines.
However, NIQ noted that the T&D market has experienced small pockets of growth, primarily driven by the DIY & home improvement category. While consumers continue to be cautious with their big-ticket spending, they are still investing in DIY projects as they see a tangible benefit to their home, particularly with increased flexible working.
Ben Morrison, Retail Services Director UK & IRE at NIQ, commented: “It’s clear that there’s been a steady uplift in sales for FMCG, particularly as inflation continues to slow. The prospect for the rest of the year is cautiously optimistic. We see the reduction in inflation continuing to help fuel shopper sentiment. Consumers are still cautious around their spending – particularly on larger, more expensive goods – and this continues to impact T&D.
“Political and economic uncertainty continues to impact bigger ticket spending, but we still see products that deliver value and clear benefits are being prioritised – whether it be for niche or specialised use e.g. Action Cams for content creation, enhanced gaming experiences, convenience around the home, or meeting the underlying desire for aspirational and innovative products.
“As the weather, hopefully, improves and we move into an eventful summer that is driven by sporting events such as the Euros and Olympics, we’re optimistic that this will further drive levels of discretionary FMCG and Tech & Durables sales.”
NAM Implications:
- Despite improvement, it appears that consumer uncertainty is holding back demand.
- Meaning that branded suppliers are paying for share maintenance/growth…
- …and own label is benefitting from a need for lower prices (for ‘similar’ alternatives).
- Problem being that the switchers may find the compromise proves less than anticipated…
- …and winning them back to brands may prove expensive.
- That said, fingers crossed…
