Despite recent suggestions that cost pressures are easing, latest data from Kantar shows grocery price inflation remains exceptionally high. However, it did fall for the second month in a row, inching down from 17.3% to 17.2% for the four weeks to 14 May. Take-home grocery sales rose by 10.8% on the same period as last year, with the discounters continuing to outperform the traditional Big Four supermarkets.
Fraser McKevitt, head of retail and consumer insight at Kantar, commented: “The drop in grocery price inflation, which is down by 0.1 percentage points on last month’s figure, is without doubt welcome news for shoppers but it is still incredibly high – 17.2% is the third fastest rate of grocery inflation we’ve seen since 2008. This could add an extra £833 to the average household’s annual grocery bill if consumers don’t shop in different ways.
“Of course, shoppers are savvy and they’re skirting higher prices by choosing more own-label goods. These lines grew by 15.2% this month, almost double that of branded products which rose by 8.3%. However, the gap between own lines and brands is narrowing in most stores, helped in some cases by loyalty discounts. The recently launched Nectar prices scheme boosted sales of brands bought on deal in Sainsbury’s, causing them to jump by more than a quarter this period.”
McKevitt continued: “In the fierce contest for market share, eyes have been on the dairy aisle in particular, where the average cost of four pints of milk has come down by 8 pence since last month. Prices are still much higher than they were 12 months ago, at £1.60 currently versus £1.30 last year, but retailers know just how important it is to offer even small savings on staple products like milk to get customers through the door.”
Despite price pressures, the data confirms that people took the opportunity to make the most of the additional bank holiday this month with celebrations for the King’s coronation. Grocery sales rose by 16% during the week of the coronation, with an extra £218m passing through supermarket tills.
Waitrose benefited from a substantial uplift in the week of the coronation, with sales up by 4.8% over the 12 weeks, the highest rate of growth the retailer has achieved since April 2021.
Aldi was the fastest-growing grocer this month, with sales up by 24.0%. Lidl’s sales increased by 23.2%, and the two discounters now account for 17.8% of the market.
Asda’s recovery continued, with it winning back market share after its sales grew by 10.6%. Its share now stands at 13.9%, a rise of 0.1 percentage points when compared to the same 12 weeks last year. Sales were boosted by its Just Essentials range, with nearly two in five Asda baskets containing at least one of these value items this May.
Morrisons recorded a third consecutive period of sales growth, although the increase was more muted versus others at just 0.6%. The grocer relaunched its ‘More Reasons to Shop’ strapline yesterday as part of its efforts to win back shoppers.
Sales increased by 8.9% at Tesco, with growth across its convenience stores, large format supermarket and online channels. Sainsbury’s sales rose by 10.5%, and it held market share steady at 14.8%.
NAM Implications:
- Inflation of 17.2% is still off-putting for brands…
- …but encouraging for own-label and the discounters.
- i.e. Aldi & Lidl combined share of 17.8%…
- …and growing at 24%.
- And own-label growing a 2x the rate of brands.
- These stats raise two essential questions for branded suppliers:
- How to safely optimise own-label potential?
- How to find ways of optimising Aldi & Lidl traffic?
- These two options are becoming too big to ignore.
- On any count…
