Photo courtesy of Sainsbury's

Could slight ease of inflation mean brighter Christmas for supermarkets?

Produce Business report

Late last week, the UK supermarket sector received some positive news from Kantar’s Worldpanel division heading into the Christmas holiday: the slight decline in the rate of inflation led to a nearly 6% rise in grocery sales in the previous 12 weeks. That was its best performance since March 2021.

With inflation still hovering at more than 14%, Kantar leaders were quick to temper excitement. They pointed out that the decline in inflation was a mere 0.1%. But the fact that it did not increase, ending a pattern of 21 straight months, was enough for guarded optimism.

“As we move into the busiest time of the year for supermarkets, there are signs that the pace of grocery price inflation is easing off slightly,” Fraser McKevitt, Head of Retail and Consumer Insight at Kantar Worldpanel UK, wrote. “Grocery inflation still has a long way to come down though and based on the current rate, shoppers will have to spend an extra £60 in December to buy the same items as last year.”

The bottom line for a family of four shopping for that Christmas meal? It will be £31, Kantar estimates. In total, they are expected to spend a record £12 billion at grocery stores this festive season.

Still, economically battered consumers are likely to be fairly bullish in their basket purchases over the next couple of weeks as they save for Christmas – with Dec. 23 being targeted as the top shopping day. And they may forego some of the extras, such as confections, to ensure they meet all of the staple items required for that big meal.

“If we look at the amount of people buying these items and the overall number of purchases made, then sales are actually down on 2021,” McKevitt writes. “We’re seeing yet more evidence of the coping strategies shoppers are adopting to mitigate rising costs.”

One key strategy that has worked throughout the past 18 months has been the purchasing of own-brand items. They have risen nearly 12%, which has not only meant a huge cost savings but allowed shoppers windows of opportunities to purchase more expensive items. In fact, Kantar points out, premium own label sales were up by 6.1% (£461 million) in the past few months.

Consumers also have been hitting supermarkets with more frequency, averaging an astonishing four trips per week to reach levels not seen since the beginning of the COVID-19 pandemic. Two big factors helped lead to the rise – the Thanksgiving run-up, and England and Wales both playing in the World Cup.

Here is where market share’s stand for the individual retail chains:

Aldi continues to outpace Morrisons, with Lidl not too far behind. McKevitt points out that both Aldi and Lidl have seen sales jump more than 20% year over year, helped by their increasing footprints across the UK.

As for the others, and their sales during the key lead up to the end of November:

  • Asda sales were up 6.1%
  • Iceland’s sales were up 6.1%
  • Sainsbury’s sales were up 4.3%
  • Tesco’s sales were up 3.9%.
  • Co-op’s sales were up 3.5%

The lone outlier was Ocado, which saw its market share dip to 1.7%, although Kantar says the retailer is making some headway in the North.



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