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Flurry Of Christmas Sales Brings Good Cheer To Supermarkets
The latest grocery share figures from Kantar Worldpanel for the 12 weeks ending 4 January 2015, show that increased consumer spending over Christmas helped the grocery market grow at its fastest rate since August 2014.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Shoppers chose to buy a little bit more this Christmas compared with last year, a trend which has pushed sales growth up to 0.6%. This is low in historical terms, but a rally for the supermarkets compared with recent months.
“Shoppers were the big winners at Christmas with cheaper grocery prices encouraging them to spend more at the tills. Like-for-like prices have fallen by 0.9% due to lower commodity costs and an ongoing price war which has continued as the large retailers battle for market share.”
Competition between the grocers has been fierce and there is now a gap of just 0.5% sales growth separating the four largest retailers. Such a tightly fought race is unprecedented in records dating back to 1994.
Fraser McKevitt continues: “Sales at Sainsbury’s fell by 0.7% over the latest period, but in a tough market this was the best performance among the big four supermarkets. Sainsbury’s traditionally performs well at Christmas, and its seasonal boost this year means it is now Britain’s second largest grocer for the first time since it lost the position in 2003. Given the seasonal nature of this share increase there is a high likelihood that Asda will retake the number two spot later in the year.”
Tesco’s sales fell 1.2% compared with last year, but this is their best performance since March 2014 and represents a notable improvement. Although revenue declines are slowing, Tesco continues to lose market share, down to 29.1% from 29.6% a year ago. Sales fell by 1.6% at both Asda and Morrisons.
While the bigger supermarkets have continued to find the market tough, Aldi and Lidl have grown by 22.6% and 15.1% to finish the year with market shares of 4.8% and 3.5% respectively. More than half of all British households visited at least one of the two retailers over the past 12 weeks. Waitrose also maintained its strong run as sales rose 6.6% to take its market share to 5.1%.
INFLATION UPDATE: Grocery inflation has seen its 16th successive fall and now stands at -0.9%* for the 12 week period ending 4 January 2015. This means shoppers are now paying less for a representative basket of groceries than they did a year ago. This is another record low since Kantar Worldpanel began recording GPI in October 2006 and reflects the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories including vegetables, eggs, milk and bread.
Major Brands in UK Market for Fast-Food and Home-Delivery Outlets Consolidate Their Dominance
According to Fast-Food & Home-Delivery Outlets 2015, a new Market Report from market intelligence provider Key Note, the UK market for fast-food and home-delivery outlets exhibited annual growth of 3.5% in 2014.
This represents healthy overall growth given the competitive nature of the marketplace, but although each market sector increased in size in 2014, sales performance varied quite substantially therein.
Maintaining brand appeal and loyalty is challenging within the context of market saturation, health concerns and the growing popularity of online ordering sites such as Just Eat, which have enhanced the status of individual takeaway and home-delivery outlets.
Considering the ongoing obesity crisis and the increasing prevalence of related diseases such as diabetes, health concerns are an important consideration with regard to brand strategy.
In recent years there has been an influx of healthier new product developments (NPDs) in this market, but it is important that any NPDs remain consistent with brand strategy and the key market drivers of convenience, price and taste. To avoid over-complicated menus and the potential dilution of brand appeal, leading companies are increasingly introducing temporary NPDs to retain a sense of exclusivity, while exploiting seasonal trends. In the pizza sector, for instance, Domino’s exploited high levels of demand during the FIFA World Cup with temporary, Brazilian-themed NPDs such as the Carnivale.
Promotional activity also represents a strategic priority for leading brands in this market. Given that many outlets in this market are largely perceived to already offer value for money, the fact that such activity is necessary reinforces the extreme competitiveness of the marketplace. At McDonald’s the Monopoly promotion — based on the Monopoly board game — is already an important annual sales driver, while brands such as Burger King have developed mobile applications that offer users restaurant vouchers, as well as providing an effective digital marketing channel. The latter is increasingly important within the context of popular ordering websites such as Just Eat and Hungry Hippo — platforms which also enable individual takeaway outlets to introduce promotions such as free delivery and free side orders. While such offers tend to restrict the profitability of small- and medium-sized enterprises (SMEs) in this market, they are an essential means of competing with the branded home-delivery market. This is reinforced by the fact that a buy-one-get-one-free offer on Tuesdays is now offered by all three market-leading pizza delivery brands — Dominos, Pizza Hut and Papa John’s.
The fact that the UK market for fast-food and home-delivery outlets continues to grow, in spite of extreme competition, is a testament to the robust nature of the marketplace and the widespread popularity of products and brands in this market. While individual sector performance will remain somewhat dynamic, Key Note forecasts market growth of 9.2% between 2015 and 2019.
* Overall, 53% of respondents at Wave 3 said that they had made at least one change in their buying or eating arrangements in the last six months for financial reasons, compared with 62% at Wave 2. * Almost half of respondents who had a fridge (47%) reported never checking their fridge temperature. * Half (50%) of respondents who reported storing raw meat and poultry in the fridge reported practices in line with those recommended to avoid cross contamination. * 65% of respondents recognised the Food Hygiene Rating Scheme, and 20% reported using a scheme to check the hygiene rating of an establishment before choosing to eat there.
Regional differences were also identified: * Respondents living in London and the North East were less likely to report always using different chopping boards for different foods (reported by 34% of respondents in each region), than those in all other regions (50% to 60%). * Those living in the North West (63%) and West Midlands (60%) were more likely to report behaviour in line with recommended practice for storing meat in their fridge, than those in London (45%), the North East (43%), East (46%) and South East (43%). * Respondents living in the North East were more likely to say that cleanliness and hygiene were the most important factor to them when choosing where to eat out (48%) compared with those in the North West (31%), London (29%), the South East (31%) and the South West (29%). * Respondents living in London were more likely to report using a food hygiene rating scheme in the last 12 months (23%) along with respondents in the North East (29%), North West (22%) and Yorkshire and the Humber (24%), compared with those in the South East (14%).