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Grocery sales fell by almost 4% in the last 12 week period, according to Kantar, despite inflation rising to its highest level since June 2020. 

Kantar found take home grocery sales fell by 3.8% over the 12 weeks to 28 November 2021 compared with 2020 as sales lapped the period of the second UK lockdown last year. 

However, sales remain strong compared with the market before the pandemic, and grocery spend was 7% higher in the latest 12 weeks than in 2019. 
 
Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Grocery sales are now being compared against November 2020 when we had tighter restrictions across Scotland and Wales and the second lockdown in England. C 

“Circumstances are very different this year. With people back in the office a few days a week and restaurants and cafés open, we’re putting less in our grocery baskets for cooking at home and as a result, the average shop size has shrunk by 8% this month versus last year.” 

Kantar found grocery inflation now stands at 3.2% for the 12-week period ending 28 November 2021, which is the highest level since June 2020.  

Prices are rising fastest in markets such as savoury snacks, crisps and cat food while falling in fresh bacon, bath and shower products and pet treats. 

McKevitt commented: ““Inflation is already nudging up the price of Christmas dinner staples. The average cost of a meal for four is now £27.48, that’s an increase of 3.4% compared with last year. 

“Consumer behaviour hasn’t caught up with these changes though. Habits we’d expect to see shift, like swapping branded products for own label or seeking out promotions, haven’t altered just yet.” 

All individual grocers saw sales fall during the period, with Tesco the best big four performer as its sales fell 1.4% compared to 5% at Asda, 5.3% at Sainsbury’s and 7.1% at Morrisons. 

Discounters Aldi and Lidl both saw sales drop 1.1% in the period, while Co-op was down 5.9%, Waitrose 4.6% and Iceland 7.1%. 

Ocado was down 2.4% in the period, but remains 35% up on a two-year basis. 

On a two-year basis Lidle is the strongest performing physical retailer, up by 12.6%, followed by Iceland, up 12.4% and Tesco, up 8.9%. 

McKevitt added: “Online grocery sales fell by 12.5% in the four weeks to late November, as we compare against more orders last year during the second lockdown. As concerns grow over rising case numbers, we expect some people will prefer to shop online again to limit their visits to stores.” 
 
Morning update 

The Black Friday event boosted overall retail sales in November, according to the latest BRC-KPMG Retail Sales Monitor. 

On a total basis, sales increased by 5% in November, against a growth of 0.9% in November 2020 – above the 3-month average growth of 2.2% and below the 12-month average growth of 9.9%. 

On a two-year basis, Total retail sales grew 4.1% during November compared with the same month in 2019. 

 UK retail sales increased 1.8% on a Like-for-like basis from November 2020, when they had increased 7.7%.  

Over the three months to November, Food sales increased 0.1% on a Total basis and decreased 0.5% on a Like-for-like basis, which is below the 12-month total average growth of 3.7%. For the single month of November, food was in decline year-on-year. 

 Over the three-months to November, Non-Food retail sales 3.9% on a total basis and increased by 0.9% on a like-for-like basis. Over the three months to November, in-store sales of non-food increased 30.5% on a Total basis and 22.2% on a Like-for-like basis.  

Online Non-Food sales decreased by 17.9% during November, compared to November 2020 when the UK was in lockdown. Non-Food Online penetration rate decreased to 47.5% in November from 71.0% in November 2020, during the second lockdown. However, it was up 10.4 percentage points on the 36.9% seen at the same point in 2019. 

BRC CEO Helen Dickinson commented: “While Christmas may or may not be getting earlier every year, Black Friday certainly is. The American holiday has now become a month-long affair in the UK, with deals spread over a longer period than ever before. As people prepared their wardrobes for the cold weather this winter, consumers took advantage of discounted clothing, shifting the focus of Black Friday from just electronics and household appliances.  

“While e-commerce was significantly down on last year, when lockdown pushed more consumers online, it still remains almost one-fifth up on pre-pandemic levels, accounting for almost half of all Non-Food spend. 

“Looking forward to Christmas, spending patterns suggest that sales could be more spread out than in previous years. Consumers, erring on the side of caution, are shopping for gifts earlier to get ahead of issues relating to shipping and transport. Meanwhile, retailers are doing everything they can to prepare stores, warehouses and deliveries ahead of Christmas, prioritising all the food and gifts that customers will need to enjoy the festive season.” 

IGD CEO Susan Barratt added: “Food and drinks sales in November struggled to compete with the same period in 2020 when sales soared as we entered the second national lockdown. However, activity did pick up in the second half of the month as shoppers started to ramp up spending in preparation for Christmas and the festive period. 

“While over two-thirds of shoppers think Christmas is a time to splash out on food, more are setting a budget on their Christmas food shopping as we see the rising cost of living starting to take hold. Our ShopperVista research also reveals that 29% of shoppers now expect food to get much more expensive in the year ahead, the highest level recorded, with increasing numbers claiming to already be experiencing rising food and energy bills.” 

Elsewhere, consumer goods supplier Supreme has increased sales and profits in its first half of its financial year, driven by M&A and growth in its most profitable categories. 

Revenue for the six months to 30 September was up 9% to £61.1m, boosted by the addition sports nutrition brand Sci-MX and batteries and lighting distributer of Vendek. 

Overall was a result of the combination of the M&A, the launch of the new vitamin brands and organic growth within the sports nutrition & wellness, vaping and lighting categories, which remain the group’s fastest growing and highest margin categories. 

Its vaping category grew revenues organically by 13%, while sports nutrition and wellness grew revenues by 192% 

Gross profit as a percentage of revenue was up to 30% from 25% in the previous period, reflecting the change in sales mix with vaping and sports nutrition & wellness, the highest margin categories in the Group, reporting the highest rates of growth.  

Adjusted EBITDA was up to £10.1m from £8.4m, with administrative expenses rising to £8m from £5,9m driven by increased selling costs, overheads associated with Supreme’s AIM listing and investment in staff. 

Administrative Expenses reported within Adjusted EBITDA1 were £8 million (HY 2021: £5.9 million), an increase of £2.1 million. This increase was broadly in three categories: 

It said trading during the start of the second half has been “good”, building on the progress made in the first half of the year.  

The Board therefore expects Adjusted EBITDA for the full year to be at least in line with market expectations. 

“The resilience of our business model has been clearly apparent both as we navigated the challenges associated with lockdowns, and, more recently, the widely reported supply chain issues across the UK and internationally, it stated. 

“Whilst the Board continues to monitor the macroeconomic situation very closely, we remain confident in the outlook for Supreme this financial year and beyond.” 

CEO Sandy Chadha commented: “The combination of Supreme’s extensive retail relationships combined with our high volume, great value product proposition continued to underpin our strong profit performance in the first six months of trading in the current financial year. Our market-leading Vaping category, alongside our high growth Sports Nutrition & Wellness division, continue to outperform their respective markets - further demonstrating our ability to attract and maintain consumer demand. 

“When combined with the operational developments we have implemented, including the acquisitions of Vendek and Sci-MX alongside the launches of Millions & Millions and Sealions, this has been an important period for our business, as we continue to leverage our unique capabilities and integrated approach to accelerate performance. 

“The second half of the current financial year has started well and our established business model, alongside our diverse product portfolio, provides the board with confidence in the group delivering a good performance in the second half and beyond.” 

On the markets this morning, the FTSE 100 is up another 1.1% to 7,311.5pts this morning, building on yesterday’s strong day of trading.

Early risers include Naked Wines, up 5.7% to 665.7p, Just Eat Takeaway.com, up 4.8% to 4,345p and Bakkavor, up 3.7% to 127.6p.

Fallers include Science in Sport, down 1.6% to 63p, Hotel Chocolat, down 1.2% to 492p and Cranswick, down 0.3% to 3,652p.

Yesterday in the City 

The FTSE 100 rebounded1.5% yesterday, to open the week up to 7,232.2pts. 

Stocks exposed to consumption on the go were the main beneficiaries, with Coca-Cola Europacific Parters up 8.6% to €48.65, SSP Group, up 5.7% to 235.2p, WH Smith, up 4.2% to 1,392p, C&C Group, up 3.7% to 234p, Coca-Cola HBC, up 3.3% to 2,437p and Compass Group, up 2.3% to 1,546p. 

Other risers included Diageo, up 2.5% to 916p, Britvic, up 2.5% to 916p, Naked Wines, up 2.1% to 630p, Associated British Foods, up 2.1% to 1,970p, Hotel Chocolat, up 2.1% to 498p and Greencore, up 2% to 133.3p. 

The day’s few fallers centred on online operators boosted by Covid. 

Just Eat Takeaway.com fell 4.9% to 4,146.5p, Deliveroo was down 3.1% to 234p, THG fell 3% to 172.7p and Ocado was down 2.7% to 1,582p. 

Other fallers included McColl’s, down 7.1% to 11.7p and Pets at Home, down 1.3% to 454.6p. 

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