UK shoppers spent a total of £51.4bn on FMCG in Q2 2024, this is just a 1.3% uplift compared with the same period last year. New data also reveals that the Tech & Durables (T&D) market continued to struggle in Q2, with an overall decline of 4.5% compared with the same period last year. This is according to new insight from the NIQ Retail Spend Barometer, which has been powered by 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 remains flat in Q2
NIQ data shows that value growth for the FMCG sector dropped from +6.1% in Q1 to +1.3% in Q2, this is despite a boost in consumer confidence and falling inflation, which fell from +3.7% in March to +2.5% in June.
This slowdown in growth is largely attributed to the timing of events such as Easter, the weather and promotional activity which had a bigger impact on sales in the short term. This is reflected in the decline of certain categories such as beverages, which dropped from a +5.4% uplift in Q1 to a -1.5% decline in Q2. The same can be said for snacking, which dropped from a +13.2% growth in Q1 to just a 1.2% growth in Q2.
However, the fall in inflation will gradually boost consumer spending as available disposable income slowly improves for many UK households. According to recent NIQ Homescan data, although sales for own label items remain slightly ahead of branded items,[1] the gap in growth levels is starting to narrow as brands use promotions more to drive volume recovery.
Poor weather drives down sales for DIY & Home Improvement
NIQ data shows that the Tech & Durables market continued to struggle in Q2 2024 with an overall decline of 4.5% Year on Year. This is also a drop from -3.4% reported in Q1 2024. While there are some areas of optimism in the T&D market, there were not enough to counteract the overall decline.
The plummet in DIY & Home Improvement – which fell from -0.2% in Q1 to -4.1% in Q2 2024 – is largely attributed to the poor weather in Q2. In particular, gardening suffered significantly as consumers failed to be inspired to buy outdoor furniture, gardening tools and equipment and outdoor items. Decorating also struggled after a period of growth, with areas such as paint declining despite a positive Q1.
However, within DIY & Home Improvement, there have been pockets of growth. Sales for items such as bedding, storage and cushions performed well in the last three months, suggesting consumers invested in lower priced items rather than spending on big ticket products.
Meanwhile, there are signs of growth for traditional tech categories, with the 2024 Euro football tournament helping to boost sales of TVs in May, especially those with larger screen sizes.
Ben Morrison, retail services director UK & IRE at NIQ, said: “While growth in FMCG was flat in Q2, there are positive signs for the quarters ahead with inflation figures starting to fall. Retailers are now under pressure to compete for shopper spend and we’re already seeing levels of promotion being maintained at 25% of sales compared to 22% for Q2 last year. Moving into Q3, we do expect to see growth levels improve with FMCG value growths in the range of +2% to +3%, helped by warmer weather. In addition, the uplift from Euro 2024 and potentially the Paris Olympics should help to provide the feel good factor missing in Q2 and give a boost to industry sales.
Morrison continues: “In terms of Tech & Durables, it remains a challenging market. Gone are the days of longer term, more considered purchases. Consumers today are choosing to make purchases based on what they need in the moment – such as new luggage for holidays or new TVs for the Euro 2024 matches. Moreover, they are buying less but buying better. This is not just in terms of more premium products for those that can afford it, but investing in products where benefits meet needs, and consumers perceive the value is justified. An example of this is that the demand continues to rise for products such as Full Auto Coffee Machines, indicating consumers are still prepared to pay a premium for the right experience.”
