Grocery Inflation Eases As Supermarkets Ramp Promotions; Tesco And Lidl Make Biggest Share Gains As Asda Continues To Struggle

Worldpanel by Numerator: grocery price inflation slowed to 4.7% over 4 weeks to 2nd November as supermarkets increased the level of promotions ahead of the key Christmas trading period.

Take-home sales up 3.2%, spending on deals up 9.4% vs spending on full-priced goods up 1.8%.

Fraser McKevitt, head of retail and consumer insight at Worldpanel: “Retailers are very alive to the financial struggles that some households are facing, not least ahead of this year’s Budget. They’re eager to show how they’re offering shoppers value for money, putting the emphasis on price cuts rather than multibuy offers. It’s not just the Grinch who’s looking for savings, with just shy of 30% of consumer spending at the grocers on promoted items in October, a figure that we expect to go even higher as we get closer to Christmas.”

Worldpanel is predicting record sales for premium lines this year, with the potential to reach more than £1bn in December.

McKevitt: “It’s important to remember that shoppers often look for great value and quality, not just the cheapest product. At Christmas especially, people want to treat themselves, and throughout the cost-of-living crisis, we’ve seen them turning to retailers’ premium own-label lines to do that in a way that’s more affordable.

"Sales of these goods were worth £582m in the latest month, and they are likely to double as Christmas edges nearer, topping £1bn in the month of December for the first time ever.”

Online grocery is the fastest-growing channel, home delivery up 11%
McKevitt: “... existing shoppers value the convenience and make more orders". On average, household online users now buy 3 shops a month, = 61% of their grocery spend.

Ocado had a record 2.1% share (12 weeks to 2nd Nov). At 15.9%, its highest sales growth (4 yrs since April 2021).

Meanwhile, Tesco and Lidl both added half a percentage point of share to their market share positions.

Lidl’s sales up 10.8% (12 week, share now 8.2%).

Tesco 28.2% of market sales up 5.9%.

Sainsbury's sales up 5.2%, share up to 15.7%.

Aldi 10.6% of the market, sales up 4.4%.

Iceland sales up 4.9%

Morrisons sales up 2.3%, market share down from 8.5% to 8.3% ( 0.1 percentage points ahead of Lidl.

Asda’s market share down from 12.6% to 11.6%, sales down 3.9%

Waitrose sales up 3.8%. Co-op sales fell 1.4% (cyber attack)

M&S grocery sales up 8.8%, fastest rate since June.

NamNews Implications:

• As can be seen, retailers are keeping inflation down via promotions.
• Without which, volume would drop off.
• Obviously piling on pressure on those retailers that cannot afford to optimise the mechanic…
• Meanwhile, switchers to premium own-label will prove expensive to win back to brands, inevitably.
• All of which piles increasing pressure on Asda, and to an extent, Morrisons.