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Checkouts Ring Up A Record Christmas As Grocery Market Waves Goodbye To Deflation
The latest grocery market share figures from Kantar Worldpanel, for the 12 weeks ending 1 January 2017, show the fastest recorded growth since June 2014, thanks to an additional consumer spend of almost half a billion pounds increasing total supermarket sales by 1.8%.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Year-on-year market growth has been helped by comparisons to a weaker Christmas in 2015, but sales were also buoyed by strong consumer appetite for festive celebration after a turbulent year. Shoppers spent £480 million more at the tills than in 2015, leading to record sales for the Christmas period.
“With Christmas Eve falling on a Saturday and giving shoppers more time to buy their final festive trimmings, the single busiest shopping day of the year was Friday 23 December with over half the population braving a grocery store. The typical household spend for December reached £365 this year – £52 more than the average month.
“Thanks to continued investment in premium own label brands across the major retailers in 2016, such products finished the year with record 12 week sales of almost one billion pounds. Top tier lines including own label fresh and smoked fish, cooked meats such as ham, and wine performed particularly well.”
After 28 months of deflation in the market, like-for-like grocery prices have increased by 0.2 percentage points to bring a return to inflation.
Fraser McKevitt comments: “The long-anticipated return to inflation suggests that the speed of growth in the overall market will continue to hasten in 2017, and both consumers and retailers will be looking at ways to avoid increasing the cost of the weekly shop. Last year retailers focused on simplifying their discounts and offers, and the level of promotional sales has fallen to 37% as a result – the lowest level over Christmas since 2009.”
Overall market growth and two additional shopping days the week before Christmas have left room for most retailers to find some success over the festive period. The big four supermarkets together accounted for 71.4% of market share, with a sales increase of 0.1% – the first time that all four have collectively grown since June 2014.
Fraser McKevitt says: “Tesco’s recent sales revival continued with an increase of 1.3% particularly helped by its performance within fresh food. However, this wasn’t enough to stop its market share from falling back by 0.1 percentage points to 28.2%.
“Morrisons, whose overall sales were held back in 2016 by the impact of a number of store closures, marked a strong start to the year with growth of 1.2% – its first period of growth since June 2015.”
“The discounters tend to take a slightly smaller share of the market in December than the rest of the year as consumers revert to traditional retailers for the holiday season. This year sales growth for both Aldi and Lidl accelerated compared to pre-Christmas levels as shoppers continued to warm to their premium lines. Year-on-year, Aldi grew sales by 11.8% and market share to 6.0%, while Lidl’s sales growth of 7.5% increased its share by 0.2 percentage points to 4.4%.”
Also increasing sales after a successful end to 2016 were Iceland, where sales grew by 9.6%, Waitrose (3.0%) and Co-op (2.4%).
Sainsbury’s saw a marginal sales decline of 0.1%, though it did deliver strong online sales growth having attracted new shoppers to the channel. While Asda was down by 2.4%, this is a considerable improvement on the 4.7% decline reported in December.
Health, Convenience and Choice Drive Fruit Snacks NPD
One of the key growth areas in the snacks category in recent years has been fruit-based snacks.
Their share of global tracked snack launch activity recorded by Innova Market Insights has more than doubled from less than 8% to nearly 18%, over the past five years. This makes it the number three snacks sub-category overall after savory/salty snacks and snack nuts/seeds.
“The market is now very diverse,” notes Lu Ann Williams, Director of Innovation at Innova Market Insights. “But it can generally cover a number of categories, led by dried snacking fruit, fruit bars and processed fruit snacks. There is ongoing activity in emphasizing the snack positioning of fruit products, with more user friendly packaging such as resealable stand-up pouches and small pots and trays, making them more suitable for anytime snacking. There has also been growth in the availability of multi-packs of individual snacks.”
The latest grocery market share figures from Kantar Worldpanel, for the 12 weeks ending 4 December 2016, reveal a particularly strong performance for premium own label ranges in the run up to the festive period.
Shoppers are spending 13% more on these lines than they did last year against a backdrop of continued slow growth for supermarkets overall, where year-on-year sales increased by just 0.7%.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Top-tier private label finds its way into 12% of shopping trips, with 88% of consumers now buying from these lines. In the past 12 weeks, 6.3% of own label purchases were from premium lines such as Tesco Finest and Sainsbury’s Taste the Difference, well ahead of the 5.7% recorded last year. We’ve seen particularly impressive performances from Morrisons’ The Best, which saw sales increase by 35%, and Asda Extra Special which grew by 15%. Over Christmas it’s likely that premium lines will record their highest ever sales figures as even more shoppers trade up to treat their loved ones.
“Despite widespread anticipation of higher prices shoppers are yet to feel the pinch of rising inflation, with a typical basket of everyday groceries 0.1% cheaper than this time last year. However, some categories are beginning to see prices increase, with fresh fish up 5.3% year-on-year, chilled ready meals up 2.3% and beer up 2.1%.
“Prices are still falling overall despite shoppers now spending less on promoted items than they did this time last year. Some 36.9% of spending was on offers during the past 12 weeks, down from nearly 40% in the 12 weeks to December 2015. Promotional activity has dipped across all five of the biggest retailers, reflecting ongoing efforts to simplify shopping and offer more of an everyday low pricing model, which relies far less heavily on promotions.”
Aldi was the only retailer to record double-digit sales growth over the past 12 weeks: its premium Extra Special brand helped the discounter increase sales by 10.0% year on year. As a result, Aldi’s share of the grocery market has increased by 0.6 percentage points to 6.2%. The next fastest-growing retailer was Iceland, with an 8.6% sales uplift contributing to a 0.2 percentage point increase and bringing the grocer’s share of the market to 2.2%. Other retailers growing sales over the past 12 weeks include Lidl, which saw a 5.7% uplift, Co-op, which saw an increase of 2.0%, and Waitrose, up 1.1% year on year.
Fraser McKevitt continues: “Tesco’s volumes sales are growing faster than its value sales, particularly in the meat and fresh produce categories. Its value sales remain ahead of the market, increasing by 1.6% year on year as the retailer grew its market share to 28.3%. Sales at Sainsbury’s fell by 0.6%, with market share down 0.2 percentage points to 16.5%, while Asda saw sales fall by 4.7% at a marginally slower rate than in recent months. Reflecting a smaller store estate, Morrisons’ overall sales declined by 1.4%, but the retailer saw particularly strong performance online – recording its highest ever sales in that channel.”