Nielsen: late shopping surge fails to prevent lowest Christmas supermarket sales growth in seven years

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Nielsen: impact of rising food prices
A combination of factors meant year-on-year sales growths at the UK’s leading supermarkets over the four weeks across Christmas hit their lowest levels in at least seven years – according to global information and insights company Nielsen.

Despite consumers spending £5bn at the UK’s leading grocers in the two weeks ending 4 January 2014 (+13% year-on-year), aggregate sales value growths during the four weeks ending 4 January 2014 were up just +1.7% year-on-year – the lowest level in the seven years Nielsen has measured year-on-year data. Unit sales (volume) decreased -1.2% year-on-year.

“The end of 2013 was a difficult time for the major supermarkets who were hit by a triple punch,”  said Nielsen’s UK head of retailer and business insight Mike Watkins. “Firstly, in-store food inflation is now less than half it was a year ago, 1.7% compared to 4.1% in December 2012. Secondly, the strong finish to the year wasn’t enough to offset weak consumer demand in the six weeks to early December, which was fuelled by cost of living concerns.

“Finally, all this has happened against a backdrop of changing shopper behaviour. Consumers are adding online grocery shopping to their repertoire of ‘stores’ used, as part of a lifestyle change to make shopping more convenient and help manage household budgets. From mid-October to the first few days of January, consumers spent 27% more on groceries online and 28% more at food discounters than a year ago.”

‘Indulgent’ groceries buck the trend
With Christmas being the focus in December, there were, however, better growths for categories such as confectionary (+8.8% value year-on-year), beer, wines and spirits (+5.3%), crisps/snacks and meat/ fish/poultry (both +2.7%).

Lidl and Aldi among biggest increases in both sales and TV/press ad spend
The UK’s 10 leading supermarkets also spent 5.9%³ more on TV and press advertising in the four weeks ending 4 January 2014 (£44.1m in total) than in the same period a year ago.

Lidl had the biggest year-on-year increase in spend (up 77% to £3.2m) which coincided with a dramatic increase in sales of 24% – second only to Aldi’s 33% sales increase. Aldi had the third biggest increase in ad spend (up 38% to £6.4m), behind Iceland (up 66% to £2.2m).

“Advertising played a key part in shaping where consumers shopped, with Lidl and Aldi significantly increasing their investment in advertising, and both were successful in attracting new shoppers,” said Watkins.

“Aldi was the outright winner in sales growth this Christmas, suggesting that the right customer offer, well communicated, is the secret to success in this highly competitive and disloyal market. Aldi, like Lidl, also benefited from shoppers spending more across a wider range of ambient, frozen and chilled foods this Christmas.”

 
Share of grocery market by supermarket