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Shoppers employ tactics to save as food inflation bites

Sales performances in the Grocery sector improved in February, buoyed up by increasing levels of food inflation, latest figures from market research company Nielsen confirm.


Shoppers employ tactics to save as food inflation bites

Sales growth in Grocery Multiples stood at +3.8 percent YoY in the four weeks to 19th February with strong sales in week ending 19th February where growth increased to +6.1 percent YoY.  However, performances have mostly been boosted by inflation within the sector with volume growth over the full 4 weeks remaining subdued at +0.7 percent YoY.

Mike Watkins, senior manager retailer services at Nielsen commented: “This time last year, when inflation at food stores was at a 2 year low, growth in Grocery Multiples was +2.8 percent. With food inflation now +4.6 percent (source: BRC-Nielsen SPI Jan 2011) the headline growths have increased. There was also a boost to sales in the final week of the period driven by promotional and event activity around Valentine’s Day.”

He continued, “As we expected, shoppers are feeling the squeeze. The numbers indicate that people have begun to shop around more and are looking for savings when they visit a supermarket. This is indicative of a consumer actively looking for trade offs and we saw this behaviour a couple of years ago at the outset of the recession, when inflation was very high.”

In this climate, it is evident that retailers remain committed to promotions with 39 percent of all fmcg sales by value being sold on offer at the Grocery Mutiples, up from 34 percent a year ago. This is helping to drive the small growth in unit sales which would otherwise likely be flat. Promotions help reduce the impact of inflation for shoppers and remain key to maintaining foot fall.

In terms of retailer performances, Tesco has started to feel a benefit from new store openings. The retailer gained new shoppers compared to this time last year, increasing share 0.2 percentage points in the 12 weeks to 19th February. Sainsbury’s continues recent success, also gaining share (+0.4% since 12 w/e Feb 20th 2010).  The retailer is once again the country’s number two supermarket, having overtaken Asda.

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