Total till sales at supermarkets in the UK fell 2.9% in the four weeks ending 29 January after facing tough comparatives with 10.6% growth over the same period a year ago when the country was in its final Covid-19 lockdown.
The data from NielsenIQ shows that whilst there were significantly fewer online shopping occasions (-14%) than last January, this was compensated by more visits to stores (+12%). Moreover, grocery shoppers in January continued to adopt an omnichannel mindset, with the share of online sales rising to 13.1%, up from 11.3% in December. Online grocery remains relatively solid against a peak of 16.1% in January 2021 and is the highest share of sales since July 2021.
NielsenIQ noted that January also led shoppers to reset their shopping habits. Shoppers opted to spend less on categories that were popular during the lockdown periods, such as beers, wines and spirits (-14.2%), frozen foods (-11%) and packaged grocery (-8.3%). As more ‘normal’ lifestyles return, with students returning to school and workers back in the office, there was strong growth in delicatessen (+11.1%), health & beauty (+9.4 %), petcare (+8%), soft drinks (+5.6%) and fresh bakery (+4.5%) categories.
This return to normality also led to growth in the convenience channel, where sales are up +2.1% compared with the same period last year, when shoppers in lockdown opted to visit larger stores, less often, and to stock up online. The growth in the convenience channel is also a result of consumers shifting their spend back to shopping little (and more often), continued home working as well as the return to school and commuting, with sales increasing for sandwiches (+60%), prepared salads (+29%), flavoured non- carbonates (+27.5%) and mineral water (+19%).
Meanwhile, Marks & Spencer maintained its position as the UK’s fastest-growing food retailer, suggesting its turnaround plan is gaining momentum. Sales at M&S Food rose 12.3% year-on-year over the 12 weeks to 29 January, giving it a grocery market share of 3.6%, up 0.4 percentage points on the same period in 2021.
Last month, the M&S group nudged up its profit outlook after delivering a strong Christmas performance, particularly in food, raising hopes that its latest attempt at a turnaround could succeed after decades of false dawns.
NielsenIQ’s data confirmed that Tesco was the best performer amongst the Big Four grocers, although they all recorded declines against tough comparatives. Aldi and Lidl continued their strong run, benefitting from the return to shopping in-store and squeezed consumers searching for value.
Mike Watkins, NielsenIQ’s UK Head of Retailer and Business Insight, said: “Sales during the first weeks of January are typically some of the lowest in the year and given last year’s lockdown, we’re measuring against very high comparatives. However, our latest data shows a continued resilience in online grocery shopping and rising sales at convenience stores in recent weeks. This suggests that shoppers are continuing to adopt omnichannel shopping habits, now that all remaining restrictions are lifted. January is also traditionally a month where shoppers are keen to keep household costs low, and along with the added convenience of online shopping, consumers have the opportunity to shop savvy by editing previous shopping lists, searching for lower-cost alternatives, and managing the total ‘checkout’ spend if they are looking to economise when shopping for groceries online.”
He concluded: “Looking ahead, we expect three headwinds to shape how we shop and what we spend over the next three months. Firstly, given the increased supermarket spend during the 2021 lockdowns, total till growths will likely decline throughout Q1 before returning to growth by Easter. Secondly, shoppers now have concerns about the increasing cost of living, with nearly half of all households saying that this is their most important concern at the moment, which brings with it the risk of reigning in some discretionary spend.
“Finally, as inflation continues to bite, shoppers will look to manage their spend on grocery shopping by shopping around, which means if they can save money this way, there are likely to be more visits but smaller basket sizes made across all channels.”
