UK shoppers spent a total of £53.7bn on FMCG in Q3 2024, this is a 3.7% uplift on the same quarter last year. New data reveals a silver lining for the Tech & Durables (T&D) market, with the rate of decline slowing to -1.7%, this is down from -2.8% recorded in Q3 2023. This is according to new insight from the NIQ’s Retail Spend Barometer, which has been drawn from GfK intelligence. The tool measures the turnover in sales of FMCG and non-food consumer products sold in retail stores across the UK.
The NIQ Retail Spend Barometer provides a complete overview of UK spend for the FMCG sector (ambient and fresh food and drink, healthcare, toiletries, homecare and general merchandise) and for the T&D sector (technical consumer goods, household appliances and DIY). This cross-category and cross-channel overview is based on real sales data and is published on a quarterly basis to illustrate household spending priorities.
FMCG spending slightly rebounds in Q3
NIQ data shows that value growth for the FMCG sector increased from +1.2% in Q2 to +3.7% in Q3, driven by an uptick in the personal care (10.7%), homecare (8.7%), fresh food (5.8%) and snacking (5.1%) categories. Beverages returned to growth to +2.1%, from a decline of -0.9% in Q2. Meanwhile, the biggest declines were experienced in tobacco (-7.9%), and paper products (-4.1%).
This rebound in growth is largely attributed to the expected sales boost from the Euros and Olympics which took place in July and August, and slightly sunnier weather compared to last year. However, despite improved consumer confidence in Q2, this stalled in Q3 as economic and financial uncertainty continued to impact consumers. Within FMCG, lower inflation is however now leading to a growing increase in volume sales growth.
NIQ data also reveals a narrowing gap between private label and branded products as the growth rates indicate shoppers are now starting to treat themselves to small indulgences once again. In Q1 2024, FMCG branded unit growth was recorded at 0.7% compared to +3.1% for private label. However, in Q3 branded unit growth sits at 1.1% versus +1.7% for private label.
Signs of positivity for the Tech & Durables market
Despite another challenging year so far for the Tech & Durables market, there are signs of positivity with a slower decline (-1.7%) in Q3 2024, compared with an overall decline of -3.5% for the rolling year to date. This paints a less bleak picture from the -4.5% reported in the previous quarter. The biggest drag in the category was home appliances (-6.2%), which declined further from -6.1% in Q2.
Yet with HMRC reporting an uptick in UK house sales, buying a new home triggers needs from DIY and garden equipment. This resulted in a more stable performance for the DIY & home improvement (+1.0%) category in Q3. Technical consumer goods (-1.4%) also fared better than last quarter (-5.2%) and was driven by a demand for high-end smartphones, and computing (+1%), which has seen a resurgence this quarter for the first time since lockdown.
Ben Morrison, retail services director UK & IRE at NIQ, said: “The first eight months of the year so far have been more optimistic compared to 2023, but shoppers remain cautious. We are seeing more considered purchasing, particularly within T&D as consumers opt to replace products when they must rather than upgrade a working one. This also plays to the desire for more sustainable living – beyond just energy efficiency – which is adding to the decision process. When it comes to upgrades, credit schemes offer immediate gratification and are used more often by those on higher incomes to enable upgrades for non-essential big-ticket items”.
Morrison concludes: “As for FMCG, retailers will be pleased to see a slight increase in the rate of growth in the sector in Q3, largely boosted by the big sporting events over the summer. With the gap closing between branded and own label items, shoppers are open to spending on certain items. However, building financial resilience remains a challenge for consumers. According to GfK’s Consumer Confidence Barometer, a quarter of consumers reported they were ‘just managing’ at the end of Q3 and 1 in 3 said they were unlikely to be able to save in the year ahead. Shoppers therefore remain cautious, so as we enter the golden quarter, promotions across retailers are going to be key in persuading savvy shoppers to trade up.”
