Consumer spending in the grocery sector continues to slow, with sales declining to -1.6% in the most recent four weeks, in the context of the 2018 bumper spring, this spring has been tougher for supermarkets.
This is a significant drop in grocery spend in comparison to the same period last year, which saw an uplift of +5% driven by the early spring heatwave, which was also helped by celebrations around the Royal Wedding.
While sales have declined in the last four weeks, there has been a slight increase in supermarket promotional activity (27% of sales)*, led by the promotions and price cuts celebrating Sainsbury’s and Tesco’s milestone anniversaries (150 and 100 years respectively), as have Morrisons with their Price Crunch campaign.
Supermarkets are also investing more in advertising to support these campaigns, as data from Nielsen AdIntel reveals that advertising spend on TV and press increased by 4% year-on-year to £80.6m in the period January to April 2019 with Sainsbury’s and Tesco both launching big anniversary campaigns, however, Asda topped the list as the largest supermarket advertising spender.**
Over the last 12 weeks, sales fell at three out of the top four supermarkets and also at M&S, with Aldi and Lidl continuing to gain market share with double digit growth. The Co-op was the next best performing retailer, with sales up +2.7% having attracted over half a million new shoppers compared to the same time last year.
Mike Watkins, Nielsen’s UK Head of Retailer and Business Insight, said: “Consumer confidence remains unchanged and with the cost of household bills continuing to rise, and 40% of households feeling insecure about their finances, the economy remains the number one concern for shoppers. The result is that shoppers remain cautious about their grocery spend as they look to manage their overall household budgets.”***
Watkins continued: “However, recent advertising seems to be resonating well with the 12 million households looking to save money on grocery shopping and we anticipate that shoppers will be responding well to the price cuts and promotions associated with the milestone anniversaries at Sainsbury’s and Tesco. Yet it’s important to note that the structural shift of sales away from traditional supermarkets continues, with Aldi and Lidl still gaining combined market share. With six in 10* households visiting these two discounters every four weeks – compared to 40% just five years ago – and new store openings, they continue to grow sales fast.”
All figures are from Nielsen Homescan Total Till unless otherwise stated.
*Nielsen Homescan FMCG
** Nielsen AdIntel – January to April 2019
***The Conference Board® Global Consumer Confidence Survey conducted in collaboration with Nielsen