Consumer cost-cutting and wet weather contribute to falling sales at UK supermarkets, Nielsen reports

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Latest supermarket share data

Latest supermarket share data

Sales at the UK’s leading supermarkets in January were lower than a year ago, according to the latest data from global information and insights company Nielsen.

Aggregate sales value growths during the four weeks ending 1 February 2014 were down -0.4% year-on-year while unit sales (volume) decreased -3.2% year-on-year.

“Despite the improving economy, UK consumer confidence actually dropped in the final quarter of 2013, indicating that it’s a shallow recovery in shoppers’ minds,” said Nielsen’s UK head of retailer and business insight Mike Watkins.

“Over half (55%) of consumers report switching to cheaper grocery brands to save money, so the record levels of January rainfall may have further dampened shoppers’ spend at a time they’re already actively cutting costs.”

Nielsen’s Consumer Confidence Index in Q4 2013 also revealed that over one third (37%) of consumers expect they’ll continue switching to cheaper grocery brands even when economic conditions do improve – up from 31% a year earlier.

Supermarket TV/press ad spend drops 3%; Sainsbury’s with biggest increase
Alongside consumer uncertainty, the UK’s 10 leading supermarkets spent 2.8% less on TV and press advertising in this four week period (£20.1m in total) than in the same period a year ago.

Sainsbury’s – the only one of the top four to increase market share year-on-year in the 12 weeks ending 1 February – spent the most on TV and press advertising in the final 4 weeks of the period (£4.1m). This was also the biggest year-on-year increase (37%) in spend among the top 10 supermarkets.Asda was the second biggest spender (£3.7m) and had the second biggest spend increase (35%).

“Without a big upturn in advertising spend to offset consumer cost-cutting and the poor weather, we saw lower sales than a year ago in terms of both money in the till and units sold. The former is also partly due to the discounters such as Aldi and Lidl continuing to be the fastest growing supermarkets,” said Watkins.“

Although we can expect a slow recovery in food retail up until the summer, the supermarkets will be hoping the World Cup and warmer weather kick-start consumer spend. Assuming underlying shop price inflation remains around 2% and consumer sentiment is broadly unchanged, we expect value sales growths to hit around 2%-2.5% later in the year.”