UK supermarket growth slows, despite boost in ad spend, reports Nielsen

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UK supermarkets have seen a slow down in year-on-year grocery sales growth in November 2012, despite increased advertising spend, voucher give-aways and promotions aimed at attracting cautious shoppers, according to the latest figures released by Nielsen.

Aggregate sales growth for the UK’s leading supermarkets during the four weeks ending 10 November was up +2.0% year-on-year. For the previous four week period (ending 24 October 2013) year-on-year sales growth was +2.9%.

Unit sales (volume) also slowed, albeit to a lesser degree, increasing by +0.8% year-on-year – compared to +0.9% year-on-year growth for the previous four weeks.

In September 2012, food inflation reached a two-year low, while the recent Q3 2012 Nielsen Consumer Confidence and Spending Intentions survey showed shoppers remain cautious about discretionary spending.

These facts are reflected in the weakened value growth in general merchandise sales at the leading supermarkets (-5% fall year-on-year), which is pulling down total store sales, said Nielsen.

However, the growth in packaged grocery remains stable at +3%, while the sales of affordable luxuries such as confectionery/crisps and snacks continue to have good momentum at +5%.

Cautious consumer sentiment, though, is reflected in the modest year-on-year sales increase of +2% for beers/wines/spirits.

Nielsen’s UK head of retailer insight, Mike Watkins, said: “It’s been a roller-coaster year, so we’ve been forecasting a slow start to Christmas trading. With so many money-off coupons available, consumers are already planning where to shop. 

“The supermarkets are investing heavily in advertising. For example, during the week ending 3 November 2012, Morrisons spent almost £320,000 on promoting its annual Christmas Coupon incentive; Waitrose was the highest supermarket spender on TV at just under £750,000 whilst Tesco spent the most across TV and print at just over £1.9m. 

“So, looking ahead, differentiated and inspiring advertising which really connects with consumers is expected to play an important role in attracting shoppers in December, particularly for the big Christmas purchasing trips from the 20 to 23 December 2012, which could be the biggest four days of sales in food retailing in 2012.”
 
Table: 12-Weekly % grocery market share