Total grocery sales fell by -0.5% in the last four weeks, despite the start of warm summer weather at the end of June and the sporting season in the U.K. Shoppers also spent less per visit compared with the same period last year.
Growth was significantly impacted by strong sales during the same period last year, during which grocery spending surged to +4.5%, thanks to the hottest June in 20 years, the early heatwave in July and the rise in food and drink spend during the World Cup.
Over the last 12 weeks, sales fell at every major supermarket, with Marks & Spencer experiencing the largest decline (-3.6%) followed by Morrisons (-3.1%) and Waitrose (-2.9%). Conversely, the discounters fared well, with Lidl experiencing a +12.8% increase in sales, whilst sales at Aldi rose by +8.5%. Iceland also experienced a lift of +0.2%.
With shoppers more reluctant to spend and a battle for the loyalty of shoppers, Nielsen’s data also shows that retailers are increasingly looking to stand out and strengthen brand credentials through advertising. Data from Nielsen Ad Intel reveals that TV and press spend between April and the end of June 2019 increased by 11.6% year-on-year to £72.76m¹, in part due to the late Easter campaigns in 2019. Aldi and Lidl topped spend at almost £12m each, with Lidl introducing a new campaign in early June focussing on the ‘Big on’ part of its message (‘Big on quality, Lidl on price’). Meanwhile, Tesco (£8.1m) and Sainsbury’s (£4.7m) focussed on a larger advertising push to mark their respective 100 and 150 anniversaries, with Sainsbury’s also launching new branding ads that highlight community involvement, with the tagline ‘Proudly doing our bit since 1869’.
Our latest data shows that some of the weakness in recent grocery spend is linked to the strong summer of 2018, where the warm weather peaked and consumer spirits were high on the events of the World Cup. This year, retailers have had to work harder to drive shoppers to spend, and the increase in press and TV advertising spend proves that retailers are looking at more creative ways to achieve this.
However, the drop in sales is also a sign that consumers are starting to change how they spend. Consumer confidence index in Q2 fell to the lowest level since Q4 2014 (down to 94 from 98 in Q1 2019), with 52%² of consumers revealing that they are now switching to cheaper grocery brands to save money, compared to 44% in Q1 2019. This suggests that with the summer holiday season now underway, retailers will need to push hard to encourage shoppers to keep spending – particularly while the sun still shines – as there may well be clouds on the horizon.
All figures are from Nielsen Homescan Total Till unless otherwise stated.
¹ Nielsen Ad Intel, 1 April – 30 June 2019, data measures TV and print media spend only
² The Conference Board® Global Consumer Confidence Survey conducted in collaboration with Nielsen Q2 2019