Supermarkets see spending surge in final weeks of December

Total Till value growth at supermarkets increased to 10.9% from 7.6% in the final four weeks ending 31 December 2022, according to the latest data from NielsenIQ. Nielsen said the increase was due to accelerated food inflation, weak comparatives and strong sales in the seven-day trading week up to 24 December. When looking at the four-week picture, food inflation (13.3%) helped value growth and volumes, whilst slow, were better than November, falling 1.5% due to more cautious household spending than last year. However, in the week to 24 December, it found value sales increased by 19% at the Grocery Multiples and spending topped £4.6bn, marking the highest spending week on record and volume sales increased by 8.8% helped by the full-week of trading in the run up to Christmas. Helped by the World Cup, beer, wines and spirits were back in growth during December, up by 0.1%, and growth was robust during the Christmas week at 11.6% as shoppers took advantage of festive promotions. During the Christmas week at the Grocery Multiples, it found that incremental spend was led by the desire to socialise with chocolate confectionery (£32m), fresh meat and cheese (£26m), milk (£22m), still wine (£20m) and crisps and snacks (£17m). Over the 12 weeks, Aldi was the fastest growing retailer with a 19.3% growth in sales and Lidl (15.7%) a close second. With over 18 million households visiting the discounters (equating for 63% of all UK households) - an additional 1.3 million on last year - new shoppers helped to drive discounter market share to 18.9% from 17.5% in 2021. M&S and Sainsbury’s traded well over Christmas with shoppers visiting more often. Tesco’s Clubcard prices also helped drive sales and ASDA continued to attract new shoppers. After a sales decline during 2022, Morrisons’ growth turned positive in the last four weeks and Ocado gained market share within the online channel. Mike Watkins, NielsenIQ’s UK head of Retailer and Business Insight, said: “Despite inflation, the pressure on household spend impacted spend per visit which increased only slightly to £22.02 from £21.34 a year ago3. Supermarkets also benefited from some very cold weather in early December and also from continued rail disruption, which may have held back some spend in the hospitality channels later in the month, helping food retailers to gain “share of calories consumed” from the out-of-home channels. “Shoppers were still willing to buy extra Christmas indulgences but the performance of the industry was shaped by the cost-of-living crisis and the need to save on grocery shopping.” He added: “Looking ahead, weak confidence around personal finances and a squeeze on disposable income will have a big impact on demand over the full year. We estimate total food retail growth in 2023 to be around 5% (a total of £190bn across all channels). However, we also expect the recession to start to influence shopper behaviour and reframe overall retail spend.”