Poor general merchandise sales slow growth at top supermarkets, Nielsen reports

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UK supermarkets will be relying on strong advertising in the final weeks of Christmas after another month of slowdown in year-on-year sales value growth due to continued weakness in general merchandise, according to Nielsen.

It found aggregate sales growth for the UK’s leading supermarkets during the four weeks ending 8 December 2012 was up +1.3% year-on-year. For the previous four week period (ending 10 November 2012), year-on-year sales value growth was +2.0%.

However, unit sales (volume) actually declined by -0.5% year-on-year – compared to 0.8% year-on-year growth for the previous four weeks.

But, if general merchandise figures are excluded, sales growths for the four weeks ending 8 December 2012 are more encouraging at +2.2%, whilst unit sales are down just -0.2%, said researchers. 

This indicates that, so far this Christmas, food and drink categories are holding up better than expected considering the continued squeeze on household spending, said Nielsen.

FMCG growths are being helped by the percentage of sales purchased ‘on offer’ remaining close to an all-time high at 36% with sharing and festive categories, in particular, being heavily supported by in-store promotions.

The end of November saw a significant increase in TV and press advertising, particularly around wines, spirits, beers and seasonal products ahead of Christmas.

During the four weeks ending 2 December 2012, Tesco was the highest spending supermarket on TV and in the press at £11.8m, just ahead of Asda at £11.2m, then Sainsbury £7.3m and Morrisons £7.1m – all figures lower than at this stage last year. In contrast, TV and press spend for Aldi – the next biggest spender – was up significantly (+36%) to £6.5m.

Nielsen’s UK head of retailer insigh,t Mike Watkins, said: “The sluggish sales figures are partly due to shoppers delaying the big shopping trips until the final week before Christmas when fresh foods are also purchased. Because shoppers are planning visits to take advantage of the many offers available this year we, therefore, expect continued use of media spend across all channels in the next few days to encourage them into store and to buy any remaining indulgencies at the same time. With Aldi and Lidl also promoting premium food and drink in a big way and targeting more affluent shoppers this Christmas, there is still a lot to play for this weekend.”

Commenting on Tesco’s performance over the four weeks ending 8 December 2012, Watkins said:  “Whilst the market has slowed since the start of October, Tesco growths have improved and there was new momentum in the last four weeks – helped by the continued use of vouchers and coupons as well as some in-store promotional offers that resonated with shoppers. Tesco is now in a much better position than last year for a strong finish to Christmas.”