The British grocery retail market saw no Christmas uplift at the end of last year as sales fell by 0.2% to £27.3m thanks to continuing price deflation, according to the latest grocery share figures from Kantar Worldpanel UK, published today (January 12) for the 12 weeks ended January 3, 2016. However the discount retailers, Waitrose, the Co-operative and Sainsbury’s successfully grew ahead of the market; winning share over Christmas
Watch Kantar’s results presentation here.
The discounters did particularly well, scooping 1 million more UK shoppers over the Christmas period as Aldi and Lidl continue to establish themselves in the minds of consumers.
“Almost one in eight [shoppers] did their single biggest December shopping trip in Aldi or Lidl, on top of the 15.6 million households who visited at some point in the 12 weeks,” explains Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
“That is an increase of nearly one million shoppers on last year, and their combined share is up from 8.3% last year to 9.7%.”
However, despite Aldi and Lidl’s success, McKevitt claims UK consumers are still spending most of their money in more traditional supermarkets, particularly in December. Total discounter share dipped from the 10% achieved just before Christmas.
Overall, shoppers reaped the benefit of falling prices during Christmas 2015, when groceries were 1.8% cheaper than the previous year.
“The amount spent on a typical Christmas dinner fell even faster – down by 2.2% – mainly due to cheaper poultry and traditional vegetable trimmings,” McKevitt notes. “Alcohol sales increased thanks to a surge in popularity for sparkling wines including Champagne and Prosecco, which increased in value by 11%.
“Wednesday 23 December was the single biggest shopping day of the year, but the anticipated uplift from an extra day in the week before Christmas didn’t help the supermarkets overall. Consumers simply delayed their shopping trips later this year, rather than making any extra trips.”
Performance by retailer
Once again, Kantar says Sainsbury’s was the best performing of the traditional supermarkets. Its premium Taste the Difference brand posted its biggest ever Christmas sales and promotional efforts were concentrated on simple price cuts rather than complicated multi-buy deals. This helped attract an additional 114,000 shoppers, with sales increasing by 0.8% on last year. Market share was 17%.
Aldi & Lidl
The structural upheaval caused by discounters Aldi and Lidl continued into the Christmas period. Lidl was the fastest growing retailer overall, with sales up by 18.5%. An expanded product range, especially in its Deluxe premium line, has encouraged consumers to increase the size of their shop, with average basket sizes up by 7% to £17.20. Aldi followed with an increase in sales of 13.3%.
While Tesco’s sales fell by 2.7%, an investment in its ‘festive five’ fruit and vegetable promotions meant it was an improvement on last month’s performance. The retailer’s share went down to 28.3%.
Asda & Morrisons
Market share for Asda and Morrisons also declined to 16.2% and 11% respectively. Morrisons share loss was expected as it continues to feel the effects of recent store closures, and the retailer hasn’t repeated last year’s Christmas Bonus loyalty cash promotion.
As usual, Waitrose benefited from shoppers trading up at Christmas, growing sales by 1.5% and taking share back up to 5.2%.
The Co-operative also won share at Christmas for the first time since the Somerfield acquisition – its sales growth of 1.4% was enough for it to secure 6% of the market.
An update on inflation
UK grocery inflation now stands at -1.8% for the 12-week period ending 3 January 2016, according to Kantar Worldpanel UK. This means shoppers are now paying less for a representative basket of groceries than they did in 2015. This is the 17th consecutive period of grocery price deflation.
Falling prices reflect the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories such as crisps, eggs and butter, as well as important celebratory markets such as ice cream, fresh and frozen poultry and cheese.