Latest data from NielsenIQ suggests grocery sales at supermarkets in the UK started to stabilise in February. However, whilst the pandemic-related disruption comes to an end, new challenges lie ahead from the threat to global food supplies and soaring energy and fuel costs that will impact shopper budgets.
Against tough comparatives with last year’s lockdown period, total till sales fell 3.4% over the four weeks ending 26 February. This is similar to NielsenIQ figures reported the previous month, where sales fell 2.9% in January.
Consumer spent £9.7bn at the grocery multiples over the last month, down 4.2% compared with last year. But there is a 4.4% uplift in sales compared with pre-covid levels two years ago, which indicates there is now a new baseline for sales growth. Moreover, as shopping behaviour normalises, industry spend per visit is stabilising at £18.50, compared to £21.10 this time last year and is now close to £17.20 of February 2020, further suggesting the end of Covid trendlines.
The data from NielsenIQ also reveals that the online share of all FMCG sales fell back to 12.5% in the last four week period (from 13.1% in January), with sales down 20% compared with the same period last year. In contrast, visits to stores are up 12% which is helping to support ‘bricks & mortar’ growth and sales in convenience channels also continue to improve (+3.3%).
In terms of retailer performance, Marks & Spencer was again the fastest-growing retailer over the last 12 weeks (+12.2%) as shoppers returned to retail parks, the high street and travel outlets. Its market share increased to 3.6%, the highest since the fourth quarter of 2017.
Lidl (+8.6%) and Aldi (+6.1%) also experienced robust growth and attracted additional shoppers due to new store openings. According to NielsenIQ, 1 in 3 of all households shopped at Lidl and almost 40% at Aldi in the four weeks ending 26 February.
However, retailers are once again facing changes to shopper habits as inflation grows and supermarkets are impacted by global food supply disruption linked to the war in Ukraine. What’s more, soaring energy and fuel costs accelerated by the crisis is expected to impact shopper budgets more generally. In a new study by NielsenIQ, which explores how consumer behaviour differs across the economic spectrum, 19% of UK shoppers are classed as ‘strugglers’, having experienced job or income loss due to the pandemic which is still affecting them today – this is compared to 23% at a global level.
Mike Watkins, NielsenIQ’s UK Head of Retailer and Business Insight, commented: “Although we are seeing a stabilisation of shopper spend, inflation at supermarkets has increased since the start of the year to 2.7% [BRC-NielsenIQ Shop Price Index], the highest we’ve seen since September 2013. The pandemic may soon be behind us, but new threats are on the horizon. Global food supply disruption and soaring energy and fuel costs, are set to impact shopper baskets and have the potential to slow down any growth in supermarket volumes.
He added: “With promotional spend unchanged at 20% of sales purchased, we can instead see a sharpening of pricing activity with price matches, price cuts, couponing, fuel vouchers, and comparative shopping basket advertising. Many supermarkets with a loyalty scheme have also offered differential price discounts as well as personalised offers which have the potential to drive frequency of visit as well as mitigate some of the impact of rising food prices. Retailers and their suppliers must be prepared for the uncertainty that lies ahead and ensure they are taking every step possible to support shoppers in balancing budgets over the next few months.”
NAM Implications:
- Looks like the new post-Ukraine norm is about
- Inflation, inflation, inflation
- Threat to global food supplies
- And soaring energy and fuel costs
- These all depress the confidence of shoppers already damaged by two years of Lockdown.
- NAMs now need to park the politics and focus on damage recovery…
