UK shoppers spent a total of £50.2bn on FMCG in Q1 2024, this is an uplift of 6.2% compared with the same period last year. However, spending on Tech & Durables (T&D) fell by -2.6% to £18.3bn as shoppers cut back on large and expensive tech purchases, such as TVs, Computing and White Goods. This is according to new insight from the NIQ Retail Spend Barometer, which is powered by GfK intelligence, which 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 spending in the FMCG sector (ambient and fresh food and drink, healthcare, toiletries, homecare and general merchandise) and in the T&D sector (technical consumer goods, household appliances and DIY) in the UK. This cross-category and cross-channel overview is based on real sales data and is set to be published on a quarterly basis to provide a new lens into household spending priorities.
Uplift in FMCG driven by fresh food
According to NIQ, although consumer confidence remains cautious, slowing food inflation (down to 3.7% in March) is enabling shoppers to add more items to their shopping basket. This has helped to drive minor positive volume growth throughout Q1 2024 for the first time since Q1 2021. This unit growth is driven by fresh and perishable food (+6.8%), due to its faster drop in inflation. As a result of slowing price increases, despite an improved volume trend, there is a slowdown in value growth from +7.1 in Q4 2023 to +6.2% in Q1 2024.
The environment of shopper cautiousness remains a key influence on shopper decision making, and this is reflected in NIQ data. Private label FMCG growth continues to outpace branded growth and 23.4% of all spend in Q1 2024 was sold on promotion. This is an uplift from 20.1% which was recorded in Q1 2023. This signals a continuation of an extremely competitive environment for retailers who continue to use all available levers to persuade shoppers of their price credentials.
NIQ consumer panel data also reveals that there is a slowdown in growth for the discounters in Q1 2024 as they annualise last year’s high growth figures. Discounters’ value growth for Q1 (+4.5%) has lagged behind traditional grocery retailers (+7.1%) for the first quarter since 2021.
Cautious shoppers choose to invest in DIY & Home Improvement
NIQ data (powered by GfK Intelligence) reveals that the Tech & Durables market experienced a -2.6% value decline in Q1 2024, this was driven by a drop in sales for Technical Consumer Goods (-4.9%) including audio and vision electronics and mobile phones as well as Home Appliances (-5.2%). This is likely a result of the economic and political environment, and exacerbated by a lack of new products entering the market.
With this in mind, the T&D market has shifted to a replacement cycle market. Data from NIQ reveals that 31% of consumers in 2021 bought to upgrade, but this has declined to 27% in 2024. And those who have replaced items due to faults have moved from 41% to 46%. Within T&D, key categories such as TVs, Computing and White Goods all continue to experience sales declines.
However, the T&D market has experienced small pockets of growth, this is primarily driven by the DIY & Home Improvement category. While consumers continue to be cautious with their big ticket spending, they are still placing investment in DIY as they see a tangible benefit to their home, particularly with increased flexible working.
Unsettled weather in Q1 extended demand for winter goods but did not deter bank holiday gardeners. Growth in DIY was limited, but Painting & Decorating enjoyed an uplift in Q1 vs. Q4 equal to 2023 driven by sales of paint rising (5%) in Q1 2024. The Easter holidays triggered demand for luggage, which had a 2% year on year increase and children’s activities confirming that treats and experiences are still important.
Ben Morrison, retail services director UK & IRE at NIQ, said: “It’s clear that there’s been a steady uplift in sales for FMCG, particularly as inflation continues to slow. The prospect for the rest of the year is cautiously optimistic. We see the reduction in inflation continuing to help fuel shopper sentiment. Consumers are still cautious around their spending – particularly on larger, more expensive goods – and this continues to impact T&D.
Morrison continues: “Political and economic uncertainty continues to impact bigger ticket spending but we still see products that deliver value and clear benefits are being prioritised – whether it be for niche or specialised use e.g. Action Cams for content creation, enhanced gaming experiences, convenience around the home, or meeting the underlying desire for aspirational and innovative products. As the weather, hopefully, improves and we move into an eventful summer that is driven by sporting events such as the Euros and Olympics, we’re optimistic that this will further drive levels of discretionary FMCG and Tech & Durables sales.”
