Total Till sales in the leading UK supermarkets slowed to 7.2% during the four weeks ending 12 August – the lowest level since January. This was despite retailers ramping up promotional activity to encourage shoppers to spend.
The figures released by NIQ suggest the drop in sales was due to lower inflation and the unseasonable wet weather over the summer months, with shoppers visiting stores fewer times (-0.5%) in the period compared to last year. Volume sales at the grocery multiples weakened to -3.8% compared to -3.6% in July, with retailers hoping the upcoming bank holiday weekend will provide a boost to the sector.
NIQ noted that retailers further increased spend on promotional activity (23%) compared to the previous month (22.5%) on all FMCG goods in a bid to ease the effects of the cost-of-living crisis and encourage spending.
The data also highlights that Tesco saw an increase in sales (+9.7%) and gained market share over the latest 12 weeks, boosted by both new shoppers and an increase in in-store visits. Aldi (+22.2%), Lidl (+16.5%) and M&S ( +11.5%) were the only other retailers who gained market share in the period.
The trend for bargain hunting continued, with 62% of consumers shopping at discounters in the four-week period and over 780,000 new shoppers at discounters compared to this time last year.
The retailers with the weakest growth were Morrisons (+1.7%) and Co-op (+2.0%), with the Co-op more impacted by comparisons against the summer 2022 heatwave.
Mike Watkins, NIQ’s UK Head of Retailer and Business Insight, commented: “Recent weeks have seen a decline in supermarket volumes, likely influenced by factors such as summer holidays and unpredictable weather. The rising cost of living also continues to deter people from dining out, with 53% of consumers attributing this decision to increased prices for eating and drinking out. The inclement weather has similarly affected non-food retail, as indicated by the recent BRC KPMG retail sales monitor. It’s evident that encouraging consumer spending has become an industry challenge, extending beyond just grocery shopping.”
A recent survey by NIQ showed that despite lower inflation, most consumers remain pessimistic about their financial situation in the coming three months, with 60% anticipating that they will be severely or moderately impacted by rising living costs.
Watkins said: “With the added concerns of increasing mortgage and rental expenses for many households, it appears that a shift in sentiment may be some time off and as a result, while Total Till growth will continue to decelerate as inflation eases, it will still be difficult for retailers and manufacturers to drive FMCG volume growth”.
NAM Implications:
- All the usual issues.
- (Bearing in mind that lower inflation simply means prices not rising as fast…)
- Standout points continue to be discounter growth driving increased shares.
- And providing reasons for suppliers to be on board…
