UK shoppers will spend £20.3bn on groceries over the festive period, an increase of 1.4% on the £20bn spent in 2014, according to the latest forecasts from IGD.
Strong signs of shopper optimism
Joanne Denney-Finch, IGD chief executive, said: “British shoppers are feeling more upbeat about Christmas spending this year. Almost a fifth (19%) tell us they plan to spend more on food and drink than the previous Christmas. This compares to 16% who said the same in 2014. 18% say they’ll spend more on their Christmas meal and a quarter will spend more on Christmas presents compared to 2014.”
Factors weighing down on the forecast
Denney-Finch said: “A growing number of shoppers are prepared to loosen their purse strings and yet this is counterbalanced by the widespread awareness of how to spend less, for instance by researching online and shopping around. People are increasingly expert at hunting down the best value. So although we expect a boost to Christmas food and grocery sales, we believe it will be just a modest one.
“Shoppers will continue to reap the benefit of a protracted period of deflation, with falling commodity and energy costs, combining with ferocious competition in food retailing. The result has been 16 consecutive months of falling food and drink prices – unheard of in the post-war era.
“The increasing popularity of discount retailers is also having an impact. Seven in ten (69% of) shoppers say they’ll use food discounters this Christmas. We forecast that discounter sales will hit £1.7bn for the five weeks between 20 November and 26 December. Beyond saving money, shoppers also cite the quality of products, the new products available and the opportunity to buy items unavailable anywhere else, as reasons for shopping in discount stores.”
Shopping around at Christmas
Denney-Finch said: “Well over half of shoppers (56%) tell us they’re going to visit two or more stores on the same trip to buy their food and groceries at Christmas. Supermarkets will remain by far the most popular destination but discounters, specialist stores (such as butcher and off licences) and convenience stores are also favoured by many. People are shopping around and spreading their spending across a growing number of formats.
“Online grocery will also receive another boost. Substantially more shoppers expect to do a ‘big Christmas shop’ online this year compared to last: 17% compared to 14%. Overall, half of shoppers (50%) intend to buy some food and groceries online, including via click and collect. The top reasons given are to avoid crowds and to save time. We forecast online will generate £1.2bn of grocery sales this Christmas.”
Shoppers’ Christmas temptations
Denney-Finch said: “Underneath the headline sales figures, this will be a season of opportunity for innovative retailers and suppliers. Six in 10 (59% of) shoppers feel that Christmas is the best time of year to splash out on food and groceries and nearly half (46%) say they’re tempted to buy novel and exclusive food and grocery products to help with the celebrations. So there’s a particular opportunity this year for food companies to showcase the quality and uniqueness of their products.”