Supermarkets Fight Back With Sales And Volumes On The Rise

For the first time in at least two years, the UKs leading supermarkets experienced two consecutive months of growth in both money taken at the till and volume of goods sold, according to latest Nielsen retail performance data.

During the four weeks ending 10 September 2016, the value of sales was up 0.4% versus the same period a year ago whilst sales volumes increased 0.3%. Both metrics haven’t been positive for two consecutive months in over two years. The growth was partly driven by people making more shopping trips which benefited supermarkets with small store formats, in particular.

Alongside this, Tesco had its best year-on-year performance this year, with sales for the 12 weeks ending 10 September down just 0.2% against the same period last year.

“With both value and volume growth most weeks since the middle of July we’re seeing the green shoots of recovery for the leading supermarkets in their battle against the discounters and price deflation,” said Mike Watkins, Nielsen’s UK head of retailer and business insight. “A sustained period of good weather and soaring temperatures into September also helped, as did an improved performance from Tesco, and continued good momentum at the likes of Co-op and Waitrose.”

Nielsen said the beverages were big winners in the last four weeks. The Soft Drinks category saw sales rise 8.3% year-on-year, while Beers, Wines & Spirits experienced a 6.8% increase.

In contrast, Packaged Grocery saw a -4.7% decline in sales “as shoppers decided to delay stocking up the larder, instead focusing on outdoor eating and foods for immediate meal preparation. This helped sales in fresh foods rise, such as produce (+3.6%) and delicatessen (+3.4%), as well as contributing to M&S having the highest year-on-year sales increase (+5%) among the leading food retailers, outside the discounters, over the twelve-week period.”

Watkins said that he expects competition to “remain intense, particularly with Tesco and, soon, Morrisons back in growth. There’s a lot of market share to play for in the £40bn sales opportunity up to the end of the year.”

He added: “This is why the supermarkets need to maintain price cuts as part of a strategy to win back market share from the discounters who are expected to respond by increasing advertising spend again in the run up to Christmas.”