Grocers banking on the excitement surrounding the Rugby World Cup to lift sales have been left disappointed after Britain’s short-lived participation in the tournament failed to inspire a rise.
Promotions in the beer category drove some growth in sales value – up 6.0 per cent year-on-year. However, massive falls in dairy (down 4.5 per cent), meat and poultry (down 3.2 per cent), and bakery (down 2.5 per cent) offset the boost, according to the latest figures from Neilsen.
Overall, during the four weeks ending 10 October 2015, sales value at the tills dropped one per cent versus the same period a year ago – while volumes declined 0.1 per cent. This is only the second time in the last 11 four-week periods that both metrics have declined.
“Deflation, discounters and weak volume growths have meant a challenging four weeks for the supermarkets – despite the relatively warm weather and the Rugby World Cup,” explained Nielsen’s UK head of retailer and business insight Mike Watkins. “Whilst lower food prices are good news for shoppers, they result in falling spend per visit across the industry which doesn’t benefit retailers who have the same level of fixed and operational costs.”
Sainsbury’s was the only one of the larger supermarkets to see sales growth for the 12 weeks ending 11 October 2015, according to Kantar Worldpanel, thanks to a strong performance in its online and Local stores offering. Sales fell at Tesco by 1.7 per cent, Asda was down by 3.0 per cent while sales at Morrisons fell by 1.0 per cent.
As such, bar Sainsbury’s – where market share was static – the rest of the leading players saw their share fall. Conversely, Aldi and Lidl continue to see growth in both sales and market share; the former now commands 5.6 per cent of the market while the later has taken a record share of 4.3 per cent.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “With like-for-like grocery prices 1.7 per cent lower than last year, the supermarket price war shows no signs of abating. Consumers have now enjoyed more than 12 months of continually falling prices and are currently pocketing these benefits rather than splashing out on substantially more grocery items, with overall volume growth of only 2 per cent. This equates to £1.5bn taken out of the market in the last year.”
Online will be a huge growth area, with sales having increased by 9.8 per cent on last year. Despite this rapid expansion, space for retailers to increase both share and revenue in this area remains, with less than a fifth of households currently shopping online. However, Amazon’s entry into the UK market could prove challenging, although reports of Tesco plotting a one hour delivery service indicate another battle for consumer attention is on the horizon.
“Amazon Fresh’s expected full launch early next year could be a major disruptor, bringing down average basket sizes, accommodating on demand shopping, and accelerating the growth of the whole online market,” McKevitt said.
With the lucrative Christmas period in sight, many retailers are upping their marketing efforts and investing in loyalty schemes with a view to retaining shoppers into the new year. While it’s too early to see the results of Tesco’s simplified Brand Guarantee scheme – which launched last week – it will prove pivotal to achieving point of difference in the market. Looking to the success of Waitrose’s landmark scheme, which allows customers to pick the items they want a discount on, Tesco will be cautiously optimistic of Brand Guarantee having an impact.