Shoppers hold back spend in grocery sector in anticipation of holiday season

Shoppers hold back spend in grocery sector in anticipation of holiday season

Woman at grocery store reading food labels while holding her shopping basket.

Following a record summer of spending, shoppers are tightening their purse strings in anticipation for the upcoming holiday season, signalled by a slowdown in grocery sales.

Newly-released data recorded by Nielsen shows value sales growth has slowed to +1.9% during the four-week period ending October 6th. This is compared to +2.4% sales growth in September. Volume sales at the major supermarkets have also fallen to -0.6%, down from 0% recorded last month*.

The unseasonably-warm weather experienced this month has also contributed to some out-of-season shopping habits. While value sales of soft drinks have grown by over 9%, volume sales of packaged grocery and household items have fallen by 2%*.

In the last four weeks, volume sales for own-label products were up +1.7% whereas branded products were down slightly at -0.3%, further suggesting that shoppers are looking to save money by switching to cheaper alternatives. Retailer promotional activity also remained stable at 26.5% of sales.

Looking at sales change, comparing the last 12-week period and the same in 2017, Morrison’s (+2.2%) remained ahead of Sainsbury’s (+0.6%). Tesco’s growth (+1.2%) also fell further behind Asda (+2.9%), with all four retailers promoting their respective price cuts over the four-week period.

Mike Watkins, Nielsen’s UK head of retailer insight, said: “The beginning of autumn has signalled an objectively disappointing, though not entirely unexpected, slowdown in sales. But keeping in mind retailers had such a strong summer period, its likely shoppers are pressing the reset button after a season of excess. The warmer weather also potentially has shoppers delaying the need to stock up and hunker down for the colder months. This paired with recent increases in fuel prices and energy bills, which are having an impact on household budgets has meant shoppers are becoming more cautious about their spending.

“It’s likely we won’t see this lull lift until the Christmas promotional period commences in two weeks time, which should give the industry much-needed momentum. With the recent weakened trading, there is a pressing need for retailers to encourage shoppers to get back into the shopping mode after schools break for half-term. Retailers will look to introduce lower prices in private label across core grocery staples to help drive volume sales – and brands will need to ramp up their promotional activity to counteract it.”

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