Latest data from NIQ shows that total till sales at UK supermarkets rose a less-than-expected 8.7% in the four weeks to 4 November. The slowdown was against the backdrop of easing grocery price inflation but was also affected by consumers preserving their spending power ahead of the costly festive season.
Volume sales continued to stabilise, with a decline of only 0.2% as shoppers took advantage of recent price cuts and an increase in promotional activity (up from 21% last year to 24%).
Average spend per visit during the month increased to £20.20 from £18.60 this time last year. However, NIQ noted that consumer caution impacted demand for general merchandise items, such as Halloween accessories, toys, clothing and homewares, with sales declining by 4.9% at major supermarkets.
The Halloween and half-term period led to an uplift in confectionery sales (+15.3%), and it was the category that experienced the highest value growth in sales over the four week period. This was followed by Meat, Fish & Poultry (+10.4%) and Packaged Grocery (+10.2%). However, Beer, Wine and Spirits (+2.3%) and Household (+2%) had weaker growth. As the holiday season draws closer, it is expected that there will be a more momentum in sales for Beer, Wine and Spirits as shoppers will take advantage of promotions to stock up for Christmas.
In terms of retailer performance, Aldi (+17.7%) and Lidl (+19.1%) continued to grow market share, whilst Sainsbury’s (10%), Tesco (+9.6%) and M&S (+14.4%) also saw strong sales growth.
NIQ estimates that over the full 12 weeks to 30 December, the supermarket sector will see a total spend of over £37bn – a 6.5% increase from last year.
Mike Watkins, NIQ’s UK Head of Retailer and Business Insight, commented: “This Autumn, shoppers have been carefully managing their grocery budget and making trade-offs with other spending, which means the supermarkets will need to get shoppers into the mood to spend as we get closer to December. Christmas campaigns will be more important than usual as shoppers are looking for smart savings and good reasons to spend. Many shoppers will be holding out for a few more weeks with the hope of not missing out.”
He added: “All eyes will now be on the top two retailers, Tesco and Sainsbury’s, to pull off a strong performance in the weeks ahead. M&S will also be optimistic of significant growth, and we also expect the discounters Aldi and Lidl to gain market share this Christmas. All five retailers are also expected to drive strong growth in premium food and drink when shoppers finally embrace the festive spirit.”
NAM Implications:
- Stand-out performance has to be the relentless growth of the discounters…
- …at the expense of Asda & Morrisons.
- And still ahead of Tesco & Sainsbury’s.
- Meanwhile, M&S well on the way back…
- …but is still small fry compared with the Mults.
- Fingers crossed for a Happy Retail Christmas…
