Shopper spend increases at UK supermarkets despite the squeeze on incomes, Nielsen reports – Retail Times

Total Till sales grew +7.6% in the last four weeks ending 3rd December 2022, this is up from +5.3% recorded last month, reveals new data released today by NielsenIQ.

This acceleration in Total Till sales is largely a result of double-digit food inflation, as UK shoppers remain cautious regarding the contents of their shopping baskets. According to NielsenIQ data, in the last four weeks, shoppers have focussed on core grocery essentials as they are mindful of discretionary Christmas spend. This has led to a lift in value growth for categories such as dairy (+13.9%), pet food (+12.5%), frozen food (+11.9%), soft drinks (+10%) and packaged grocery (+9.2%).

In the last four weeks, volume sales grew for crisps and snacks (+3.6%), likely helped by World Cup celebrations that have brought many friends and family gatherings together. It is also the second highest performing category in terms of value sales (+12.7%). Beer, wines and spirits, which is a key category to drive value sales at this time of the year saw both value -1.5% and volume -3.6% declines. This may be attributed to overlaps in terms of trade challenges and the beginning of Omicron reported in the UK. That being said, the World Cup has helped beer sales which are up 3.1% versus a year ago, which has led it to gain an additional 1% share of total BWS sales. 

According to a recent Christmas survey from NielsenIQ, key factors for consumers when choosing their supermarket this year will be low prices (55%), quality (50%) and good stock availability (49%). Promotions will also have their role to play this Christmas with 43% of consumers saying that promotions are important². While retailers have now launched their Christmas advertising campaigns, retailers are now reacting to cautious shopper needs by reducing prices across categories including fresh produce, while some are also re-introducing short term vouchering, on top of pre-planned World Cup promotions.

NielsenIQ data reveals that online sales fell 1.3% and the online share of FMCG spend remained at 11.3%, down from 12.3% this time last year. In contrast, there was strong growth in brick and mortar, with sales up 9.3% and visits to stores up +7.4%. It appears that shoppers are hunting for the best value and are much less reliant on online shopping than in the previous two years. 77%² of shoppers say they will do their Christmas grocery shopping in an actual store.

In terms of retailer performance over the last 12 weeks, discounters gained momentum, with Lidl sales at +12.9% and Aldi at +12.4%. The Cooperative (+8.8%) benefited from consumers managing budgets by shopping locally, Meanwhile, sales were stronger at Iceland (+7.6%), likely helped by consumer trends in purchasing frozen food, as households cope with rising energy, travel and food prices.

Mike Watkins, NielsenIQ’s UK head of retailer and business insight, said: “With double digit food inflation, shoppers will be spending more to buy less this Christmas but there are now a number of new coping strategies to help meet increased costs. These include wasting less food, shopping little and more often as well as taking advantage of the many savings being offered by retailer loyalty schemes. However, it is what shoppers are putting into their baskets that is the most revealing. By trading down, for instance to private label, lower priced items or buying different pack sizes, a third of the increased price of the typical shopping basket for the savvy shopper can be saved.”

Watkins continues: “With the weather turning colder and seasonal spend increasing every week, if the current momentum is maintained, the sales at the Grocery Multiples will be the highest yet – around £12.6 billion in the next four weeks, with the spend during Christmas week ending 24^th December topping £4 billion for the first time. Even so, volume sales will fall by around 4% at the supermarkets this Christmas with discounters expected to exceed 19% market share for the first time.”

Table: 12-weekly % share of grocery market spend by retailer and value sales % change