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UK supermarket sales fell 1.8% over the four weeks to 23 April, according to NielsenIQ, albeit spending during the Easter period helped lift sales from the 4.1% slump seen in March.

UK shoppers spent £10.1bn on groceries in the four week period, down from £10.5bn in the same four week Easter period in 2021, but it is above the £9.6bn in sales recorded during the same period in 2019.

Nielsen said the figures highlight a rebalancing of basket spend as UK shopping habits return to pre-pandemic levels.

It recorded a slight decline in the number of items in the basket (11.2 items compared to 11.5), suggesting that shoppers are now more cautious of how much they are spending and are making trade-offs around the number of items purchased.

Whilst online sales fell 18.5% compared to a year ago, shopper penetration is holding at 26.5% of households. This further highlights the rebalancing of basket spend; as shopping behaviours normalise, this is reflected in smaller online basket spend.

Meanwhile, in-store sales are growing (+0.8%) and visits to stores are up 5.1%, this has impacted the online share of grocery spend, which has now fallen to 11.8%, the lowest since April 2020.

In terms of retailer performance, Aldi (+6.4%) and Lidl (+9.1%) led the market in terms of growth, which were helped by new comparative advertising campaigns that focussed on the prices of their overall shopping basket.

Tesco was the only retailer of the ‘big 4’ supermarkets to have gained market share, despite a 2.8% drop in sales. Sainsbury’s was down 6%, Asda 8.2% and Morrisons 8.7%.

The performance of M&S remained strong with growth of 3.8% - the only non-discounter still in annual growth.

The strongest category in the last four week period was confectionery (+35%) which was aided by the timing of Easter, followed by petcare (+13.6%), health and beauty (+8.3%), soft drinks (+3.3%) and delicatessen (+2%).

There was a decline in sales for beers, wines and spirits (-15.9%), meat, fish and poultry (-7.8%) as well as frozen food (-7.5%).

Mike Watkins, NielsenIQ’s UK head of retailer and business insight, commented: “Easter is a catalyst for sales growth and if a later Easter lands with warm weather, this can really help drive footfall. This was the case last year, which also coincided with the end of the final lockdown, giving a one-off boost to supermarket sales. Although sales this year are more subdued, they are still above levels recorded pre-pandemic in 2019, and further indicates a return to normal shopping behaviours, where shoppers no longer need to be concerned about stock levels and shortages.”

“However, it is clear that as cost-of-living increases continue, retailers will be under pressure to ensure they have consumer mindsets front of mind, which are set to focus more on economising on the number of items purchased. Promotional spend has already moved up to 21.5% of value sales, and whilst in this instance this reflects seasonal promotions, this could also herald the start of more overt pricing activity in the weeks ahead, such as via private label price cuts and more targeted promotions through loyalty schemes. With this in mind, it will be important for retailers and brands to adapt ranges and prices to help maintain sales momentum in Q2 and into the start of summer.”

Morning update

Shop price annual inflation accelerated to 2.7% in April, according to the BRC-NielsenIQ Shop Price Index, as the cost of living crisis continues to accelerate.

The 2.7% rise was above the 2.1% recorded in March and well above the 12-month average of 0.4%.

The figure is the highest rate of inflation since September 2011.

Food inflation accelerated to 3.5% in April, up from 3.3% in March and is the highest inflation rate since March 2013.

Fresh food inflation decelerated in April to 3.4%, down from 3.5% in March, but ambient food inflation accelerated to 3.5% in April, up from 3.0% in March.

Non-food inflation accelerated to 2.2% in April, up from 1.5% in March, which is now the highest rate of inflation since the data series began in 2006.

BRC CEO Helen Dickinson commented: “The impact of rising energy prices and the conflict in Ukraine continued to feed through into April’s retail prices. Non-food products, particularly furniture, electricals and books, have seen the highest rate of inflation since records began. This has been exacerbated by disruption at the world’s largest seaport, following Shanghai’s recent lockdown. Food prices continued to rise, though fresh food inflation slowed as fierce competition between supermarkets resisted price hikes on many everyday essentials.”

“Global food prices have reached record highs, seeing a 13% rise on last month alone, and even higher for cooking oils and cereals. As these costs filter through the supply chain, they will place further upward pressure on UK food prices in the coming months.

“Retailers will continue to do all they can to keep prices down and deliver value for their customers by limiting price rises and expanding their value ranges, but this will put pressure on them to find cost-savings elsewhere. Unfortunately, customers should brace themselves for further price rises and a bumpy road ahead.”

Mike Watkins, head of retailer and business Insight, NielsenIQ, added: “Inflation shows no signs of abating and the increase in non-food prices is an extra challenge for the high street as fragile consumer confidence and rising living costs are likely to negatively affect consumer spending.

“With food retailing no longer immune to these pressures, supermarkets are reacting by cutting the prices of some everyday grocery products including private label to help limit shop price inflation.”

On the markets this morning, wholesaler Kitwave said it has experienced “strong” trading in its first half to 30 April to boost earnings.

All divisions of the business now trading at pre-pandemic levels or higher.

Following this performance, the board now anticipates the group’s results for the full financial year to be “slightly” ahead of market expectations.

Due to the seasonality of the business, there is a heavier weighting towards trading in the second half of the year, it noted.

It also cautioned that the final full year results of the group will be influenced by external pressures and uncertainties from cost of living pressures impacting end consumers’ disposable income.

The business will also continue to face higher operating costs, however the board said it is confident that these will be recovered.

CEO Paul Young commented: “I am pleased to report on the progress made by the Group in the six months ending 30 April 2022. Following an encouraging first half performance, and with the second half of the year typically driving increased trading, we expect full year results to be slightly ahead of market expectations.

“During the period, we were delighted to announce Kitwave’s first acquisition since its admission to AIM in May 2021. The acquisition of M.J. Baker enables a significant expansion of the Group’s activities into south-west England and complements the Group’s existing Foodservice division. The integration of the business into the Group is going as hoped and the business is operating in line with internal expectations.

Elsewhere, agriculture group Wynnstay also expects earnings to exceed current expectations due to substantial rises in fertiliser prices.

Last month the board reported that trading in the first four months of the new financial year had been in line with management expectations across core activities, while fertiliser operations at Glasson had continued to experience substantial one-off gains.

This was as a result of sharply rising fertiliser commodities prices, caused by significant increases in the world price of natural gas, which is used to produce ammonium nitrate fertiliser.

Since then, fertiliser commodities prices have remained abnormally high, reflecting the consequences of military conflict in Ukraine, including the disruption of supplies from Russia.

The board therefore now expects the group’s pre-tax profits for the year to October 2022 to exceed current market expectations.

Group revenue will also be significantly increased by commodity price inflation across all activities, including feed.

However, Wynnstay cautioned that the group’s absolute unit margin model means that group operating profit will not benefit proportionately.

Finally, pub group JD Wetherspoon continues to see a post-Covid sales recovery.

For the 13 weeks to 24 April 2022 like-for-like sales decreased by 4%, in comparison with the same period in 2019, with year-to-date like-for-like sales down by 6.2% compared to pre-Covid levels.

Like-for-like sales in the three weeks to 13 March 2022 had improved to -2.6%. In the following six weeks, to the end of the quarter, there was a further modest improvement to -1.6%. In the last two weeks of the period, like-for-like sales were slightly positive.

The company operates 47 pubs which have music, trading as ‘Lloyds’. Like-for-like sales for these pubs, in the quarter, were up 3.4%.

The company also operates 57 hotels. Like-for-like room sales during the quarter were up 5%.

Chairman Tim Martin, said: “Since Covid restrictions ended, sales have improved, as previously reported. As many hospitality companies have indicated, there is considerable pressure on costs, especially in respect of labour, food and energy. Repairs are also running at a higher rate than before the pandemic.

“The company anticipates a continuing slow improvement in sales, in the absence of further restrictions, and anticipates a “break-even” outcome for profits in the current financial year.”

On the markets this moring, the FTSE 100 has fallen back 0.2% to 7,545pts today.

Risers include Wynnstay, up 2.3% to 620p, WH Smith, up 1.8% to 1,482.5p and Hotel Chocolat, up 1% to 358.5p.

Fallers include Just Eat Takeaway.com, down 3.7% to 2,152p, Associated British Foods, down 3.1% to 1,550p and Deliveroo, down 3.1% to 109p.

Yesterday in the City

The FTSE 100 closed yesterday up 0.2% to 7,561.3pts.

Risers included THG, up 5.3% to 113.4p, Marks & Spencer, up 4.1% to 143.4p, Science in Sport, up 4% to 65p, Nichols, up 3.7% to 1,400p, Naked Wines, up 3.5% to 376.2p, Sainsbury’s, up 3.3% to 240.9p and B&M European Value Retail, up 2.5% to 502.6p.

The day’s fallers included Tate & Lyle, down 11.8% to 800p, Hotel Chocolat, down 4.7% to 355p, Hilton Food Group, down 3.9% to 11,70p, McBride, down 3.8% to 35.1p, Domino’s Pizza Group, down 2.4% to 339.2p, Greggs, down 2.4% to 2,294p and Coca-Cola Europacific Partners, down 2.2% to €47.65.

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