Grocers hit by “triple punch” of slowing food inflation, weak consumer demand and a shift in shopping habits
London, 17 January 2013 – A combination of factors meant year-on-year sales growths at the UK’s leading supermarkets over the four weeks across Christmas hit their lowest levels in at least seven years – according to global information and insights company Nielsen.
Despite consumers spending £5 billion at the UK’s leading grocers in the two weeks ending 4 January 2014 (+13%* year-on-year), aggregate sales value growths during the four weeks ending 4 January 2014 were up just +1.7%* year-on-year – the lowest level in the seven years Nielsen has measured year-on-year data. Unit sales (volume) decreased -1.2%* year-on-year.
“The end of 2013 was a difficult time for the major supermarkets who were hit by a triple punch,” explains Nielsen’s UK head of retailer and business insight Mike Watkins. “Firstly, in-store food inflation² is now less than half it was a year ago, 1.7% compared to 4.1% in December 2012. Secondly, the strong finish to the year wasn’t enough to offset weak consumer demand in the six weeks to early December, which was fuelled by cost of living concerns.
“Finally, all this has happened against a backdrop of changing shopper behaviour. Consumers are adding online grocery shopping to their repertoire of ‘stores’ used, as part of a lifestyle change to make shopping more convenient and help manage household budgets. From mid-October to the first few days of January, consumers spent 27% more on groceries online and 28% more at food discounters than a year ago.”
With Christmas being the focus in December, there were, however, better growths for categories such as Confectionery (+8.8% value year-on-year), Beer, Wines and Spirits (+5.3%), Crisps/Snacks and Meat/ Fish/Poultry (both +2.7%).
The UK’s 10 leading supermarkets also spent 5.9%³ more on TV and press advertising in the four weeks ending 4 January 2014 (£44.1 million in total) than in the same period a year ago.
Lidl had the biggest year-on-year increase in spend (up 77% to £3.2m) which coincided with a dramatic increase in sales of 24% - second only to Aldi’s 33% sales increase. Aldi had the third biggest increase in ad spend (up 38% to £6.4m), behind Iceland (up 66% to £2.2m).
“Advertising played a key part in shaping where consumers shopped, with Lidl and Aldi significantly increasing their investment in advertising, and both were successful in attracting new shoppers,” notes Watkins.
“Aldi was the outright winner in sales growth this Christmas, suggesting that the right customer offer, well communicated, is the secret to success in this highly competitive and disloyal market. Aldi, like Lidl, also benefited from shoppers spending more across a wider range of ambient, frozen and chilled foods this Christmas.”
All figures are from Nielsen Homescan Total Till unless otherwise stated
*Source: Nielsen Scantrack Grocery Multiples
²Source: BRC Nielsen Shop Price Index
³Source: Nielsen Ad Dynamix
The Nielsen continuous 14,500 GB household panel is geo-demographically balanced and designed to measure household purchasing through a wide range of channels. It includes all food and drink and non-food spend (e.g. household, personal care, clothing, electrical, cards and stationery, toys, music, general merchandise, etc). It represents the total amount paid (after all coupons and vouchers), found on the till receipt.
The Nielsen scanning service that measures total store sales every week by SKU for 15,000 shops across all food and drink trade channels in GB. This uses the actual EPOS data from retailers, thus, Scantrack is the most robust and reliable measure of FMCG sales and is integrated with Homescan for the key indicators of retailer and category performance. The total market measured is £140bn per annum. ‘Grocery Multiples’ is a defined sub-set of the major supermarkets that also includes all food sales from Marks and Spencer (but excludes Aldi and Lidl). The Grocery Multiples account for over £117bn of all GB food, drink and supermarket general merchandise sales.
Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands.