London, 6 June 2014 – The heavy use of price cuts and product promotions is failing to encourage consumers to buy and spend more at the UK’s leading supermarkets, according to the latest data from global information and insights company Nielsen.
During the four weeks ending 24 May 2014, consumers spent -0.9%* less money at the UK’s leading supermarkets than the same period a year ago, buying -2.1%* less volume.
“Supermarkets are trying hard to stimulate sales – 35% of sales are on items with price cuts or special promotions – but it’s still not enough to override consumers’ money-saving mindset,” says Nielsen’s UK head of retailer and business insight Mike Watkins.
“The situation is compounded by record low levels of shop price inflation and price cuts in staple categories such as milk, bread and produce, which aren’t generating a large enough uplift in volumes to grow revenue.”
Sales growths are also not being helped by the unpredictable weather. In the week leading up to the Bank Holiday of 26 May there was only a small uplift in sales (+0.8%*). However, over the four-week reporting period, Soft Drinks’ sustained growth meant it was the best performing category (+3.2%) – helped by a short burst of sunshine and hot weather in the middle of the month.
Watkins comments: “The industry will certainly have its hopes heavily pinned on a successful World Cup for England and a decent summer to kick-start sales.”
With the discounters and high street value retailers continuing to steal market share, the weakest underlying growths remain in Packaged Grocery (-3.7% during the 12 weeks ending 24 May).
In the 12 weeks to 24 May, Aldi and Lidl continued to outperform the market with sales increases of 33% and 22%, respectively. Along with Waitrose and M&S, they are still gaining market share, with the four collectively adding 2.3% market share over the 12-week reporting period.
Among the “big four” Asda now has the strongest growth (1.7%) and has steadily grown sales ahead of the other three since October 2013. Sainsbury is consistently attracting new shoppers – over half a million in the four week period – and is outperforming Tesco and Morrisons in sales growth.
In an effort to claw back market share, Morrisons invested the most in Press and TV advertising in the four week period (£6.7m) to support its ‘I’m Cheaper’ campaign. This is a +39% spend increase compared to the same period last year – over twice the increase (+17%) for supermarkets as a whole, who spent £30m in total.
“It’s now common practice for consumers to shop at both a leading supermarket and an Aldi or Lidl, leading to some 40% of households now visiting these discounters every month,” concludes Watkins. “With expanded food and drink ranges, and significant increases in advertising spend, we expect Aldi and Lidl’s momentum to continue through the summer with their quality and low price messaging still resonating well with shoppers.”
All figures are from Nielsen Homescan Total Till unless otherwise stated
*Source: Nielsen Scantrack Grocery Multiples
¹Source: 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.