Total Till sales at UK supermarkets have seen continued growth (+6.6%) in the last four weeks ending 27th January 2024 according to new data released today by NIQ. This growth is reflective of a slow down (6.1%) in food inflation, which is at its lowest rate since June 2022.
Data from NIQ reveals a volume growth (+1.3%) in grocery shopping after Christmas, compared to last year when inflation was in double digits. This shows that shopper behaviour is normalising as inflationary pressures reduce.
NIQ data also reveals a reduction in promotional activity (23%), down from 26% over Christmas, this is not surprising as promotional spend was amplified due to retailers attempts to lure customers with loyalty cards price reductions.
With wetter weather and storms over January keeping shoppers at home, NIQ data reveals an increase (+6.8%) in online grocery spend as the channel maintains share (11.2%) of FMCG sales ahead of in-store shopping which only grew (+5.3%) within the four week period.
Shoppers also prioritised simple winter meals, saving money and avoiding waste to keep costs down. This included a growth in sales of fresh meat (+11%) and fresh poultry (+10%) alongside less expensive food options such as frozen chips (+15%), frozen fruit (+14%) and treated and prepared meat products (+13%). Shoppers were also willing to adopt a flexitarian diet, with a growth in sales of dried vegetables and pulses (+23%), rice and grains (+22%) and herbs and spices (+20%). The data also showed that sales of beer, wine and spirits are back in growth (+7.3%).
In terms of retailer performance over the last 12 weeks, Lidl (+13.2%) followed by M&S (+11.6%) and Ocado (+11.3%) were the fastest growing retailers. Meanwhile, growth at Sainsbury’s (8.4%) was just ahead of Tesco (+6.9%).
Mike Watkins, NIQ’s UK head of retailer and business insight, said: “Shopping visits increased again in January and was helped by the return of smaller baskets after the big trolley spends in December. In addition, many households were moderating spend as paying off Christmas bills takes priority. To put this in context shoppers spent 24% less on Food & Drink in January compared to December.”
Watkins continues: “During the height of the cost-of-living squeeze in early 2023, discounter growth was around 20%. However, this level of growth was not sustainable, so it’s no surprise to see growths back to 10% over the last 12 weeks given the slowdown in inflation.
Whilst consumer confidence is slowly improving, there remains some caution for FMCG spend as NIQ Homescan research also shows that 62% of households anticipate that in the first part of 2024 they will be moderately/severely affected (more so for households with families) which is up from 57% at the end of last year.”
Watkins concludes: “As we look ahead and sentiments and shopper behaviour change, we expect to see the trend of managing overall basket spend continue even as inflation continues to slow, with Easter and warmer weather in spring giving the next boost to FMCG spend.”
Table: 12-weekly % share of grocery market spend by retailer and value sales % change
