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Insight: supermarket sales up 3.9% as grocery inflation eases off

New figures on the grocery market have revealed that growth has exceeded 3% for the fourth consecutive 12 week period with supermarket sales increasing by 3.9% year-on-year.

FOOD & DRINK

Insight: supermarket sales up 3.9% as grocery inflation eases off

New figures on the grocery market have revealed that growth has exceeded 3% for the fourth consecutive 12 week period with supermarket sales increasing by 3.9% year-on-year.

The figures from Kantar Worldpanel covering the 12 weeks ending 16 July, show that June’s hot weather was a boost for UK grocers, with sales particularly buoyant around the hottest June day for 40 years.

Ice cream sales were up 34% in June, while sales of sun care products increased by 40% year-on-year. Over the 12 week period, shoppers spent an additional £158 million on alcohol. Fruit and vegetable sales were also up, rising by 7%.

Commenting on the market, Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Robust market growth this year has been boosted by higher grocery inflation, but consumers will be pleased to hear that price rises are no longer accelerating. Like-for-like inflation now stands at 3.2%, the same rate of increase as this time last month. One year on from the EU referendum – which had a marked impact on the price of imported groceries – hard-pressed shoppers could soon start to feel upward pricing pressures ease.”

During the period, Lidl was the UK’s fastest growing supermarket with a sales increase of 19.4%. This meant its market share rose to a record high of 5.1%. Meanwhile, Aldi’s sales grew by 17.9% to increase its share of the market by 0.8 percentage points to 7 %.

Tesco, Sainsbury’s and Morrisons saw sales increases of 2.3%, 2.2% and 2.1% respectively. The fastest-growing of the big four retailers, Tesco continued to perform well in its larger stores and also saw momentum buoyed by a particularly strong performance online.

McKevitt explained: “Tesco clearly sees its online business as a crucial component of its ongoing recovery, evidenced by its move into nationwide same day grocery delivery ahead of the competition. It remains to be seen if this investment will pay off – while it has the largest share of online sales Tesco overall is still losing market share, down 0.5 percentage points to 27.8% over the past 12 weeks.

“Sainsbury’s benefited similarly from strong online custom, while its smaller Local convenience stores also contributed to the retailer’s 2.2% sales increase. After leading the move towards fewer multibuy promotions in 2016, Sainsbury’s is now aiming to further simplify its pricing by reducing price cut deals. This approach means that only 36% of the grocer’s products are currently sold on promotion, compared to an average of 42% across its big four rivals.”

Sales at Morrisons were boosted by the success of its ‘The Best’ range which helped to grow its premium own label sales by 13%.

Growing for the fourth consecutive period, Asda attracted an additional 398,000 new shoppers to increase sales by 1% year-on-year. 

Iceland’s market share remained static year-on-year at 2.1%, with sales increasing by 5.7%, while Waitrose and the Co-op saw sales growth of 2.8% and 0.4% respectively. Online grocer Ocado grew its sales by 11.7% which meant its overall market share held stable at 1.3%.

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