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Supermarket figures “most encouraging” in over eight months
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Supermarket figures “most encouraging” in over eight months

The latest UK supermarket sales figures are the most encouraging in over eight months, according to Nielsen retail performance data released today.

During the four weeks ending 21 May 2016, the value of sales was down just -0.1%¹ versus the same period a year ago, whilst volume was flat (0.0%¹). The last time both value and volume year-on-year figures were better than these (excluding an Easter-inflated period) was the four-week period ending 12 September 2015.

These are the most encouraging figures for the supermarkets for quite some time, driven by the fortnight from the 7th May when good weather helped value growths return to positive territory of 2.1%. However, it does show how reliant they are on the weather for weekly growth, particularly with deflation continuing to drive food prices down².

Nevertheless, the underlying sales trend is slowly improving and the supermarkets should return to sustainable, albeit low, positive growth later in the summer. With the proportion of shoppers switching to cheaper grocery brands to save money at a lowest-ever level³, this indicates that initiatives to reduce prices permanently and run less promotions is resonating well with shoppers.

The amount of the average supermarket shopping bill that went on promotional items in the four-week period remained at the new seven-year low of 29%.

The Big Four all lose market share

All four of the major supermarkets saw a decline in sales during the twelve-week period ending 21 May 2016 – Asda’s being the most pronounced (-5.6% year-on-year). In contrast, Aldi (+14.2%) and Lidl (+13.2%) continued to see large year-on-year gains.

The Co-operatives continued to do well, reaching a market share of 5.6% – even before the major re-brand was announced. They continue to attract new shoppers and, despite the deflationary environment, are seeing shoppers spend more per visit – the complete opposite to what’s happening among the Big Four.

Price cuts and better weather helped some categories to their best figures this year – Delicatessen saw a 3.8% increase in sales value during the four weeks ending 21 May 2016, while Produce saw a 2.4% rise. Both categories saw a 4.1% increase in volume.

Cutting fresh food prices is an important weapon for the supermarkets in their battle with the discounters along with provenance. Six-in-10 shoppers actively choose to buy British foods⁴ and many look to buy foods from their local area, so helping shoppers understand how a product is produced or sourced is another differentiator.

Notes
All figures are from Nielsen Homescan Total Till unless otherwise stated
¹Source: Nielsen Scantrack Grocery Multiples
²Source: BRC Nielsen SPI (shop prices in food retailing fell -0.3% in May)
³Source: Nielsen Consumer Confidence Index, Q1 2016
⁴Source: Nielsen Homescan Survey