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Supermarkets start year with 6-month growth high
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Supermarkets start year with 6-month growth high

2018 got off to an encouraging start for the UK’s leading supermarkets, as sales rose by the highest year-on-year rate for over six months, according to Nielsen retail data released today.

Shoppers spent 4.2% more on groceries during the four weeks ending 27 January versus the same period a year ago, as inflation continues. The last time year-on-year growth was higher was 5.1% in July 2017, following a short heatwave.

Excluding the discounters, sales rose 2.7%¹, while volumes only rose 0.1%.

Inflation and New Year’s eve falling within the reporting period – which benefited alcohol (spend up 10%) and soft drinks (8%) in particular – helped supermarkets start 2018 in an encouraging fashion, following an extremely good Christmas. This offset the fact that most of the major supermarkets saw less visits than a year ago as shoppers are still in an economising mood and may have cut back on restocking the cupboards with household bills coming in after Christmas. Furthermore, half of those who have changed their shopping behaviour are switching to cheaper grocery brands².

January always has one of the lowest sales of any month as shoppers generally have less need to fill big trolleys after Christmas so they tend to revert to smaller stores which helped Iceland, The Co-operative and the discounters who saw visits rise after Christmas.

Over the twelve weeks ending 27 January, Tesco had the most improved year-on-year performance among the Big Four (sales up 3.4%), followed by Asda (2.5%). Overall, Marks & Spencer and Iceland (both up 3.7%) had the best growth figures outside of the discounters.

Looking ahead, shopper promiscuity and the ‘little and often’ trend will be a key driver of retailer performance, other than cold weather, over the next two months. Should inflation peak, then the early Easter at the end of March will then encourage shoppers to trade up and incremental spend should be enough to sustain 4% industry growth through to the start of spring.

NOTES

All figures are from Nielsen Homescan Total Till unless otherwise stated.
¹Nielsen Scantrack
²Nielsen Consumer Confidence Index