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Grocery sales at UK supermarkets have tumbled as locked-down consumers returned to pubs, cafes and restaurants following easing of coronavirus restrictions, the latest data from NielsenIQ showed.
During the first week of indoor hospitality reopening (17 May), figures at the mults declined 6.7%, with overall total till grocery sales down 2.7% in the four weeks to 22 May.
Numbers a year ago were also buoyed by a summer heatwave and an earlier late May bank holiday.
However, despite the fall over the past month, food retail sales increased almost 11% compared with the same period in 2019, with shoppers spending £9.1bn over the four-week period.
NielsenIQ data also showed visits to stores were up by 20% compared with the same period last year, but this meant spend per visit fell to £17.40 from £21.50 in May 2020.
Demand for online shopping remained high, with 28% of UK households still going digital in the past four weeks. It is the same figure as a year ago – and considerably more than the 17% in May 2019.
As a result, Brits spent £1.25bn online in the period to leave the online share of grocery sales at 13.8% – exceeding the 13.4% recorded in May 2020, but a slight decline on last month’s figure of 14.2%.
Mike Watkins, NielsenIQ UK head of retailer and business insight, said: “Despite lockdown restrictions easing, it is evident that online grocery remains popular with British consumers, with almost one in three households still choosing to shop online.
“This suggests the shift of spend to online we saw over the last year is now a more permanent fixture for many and part of regular grocery shopping routines. With supermarkets placing more investment in their rapid delivery and fulfilment, shoppers are no longer seeing this only as an option for one large shop. Usage is evolving to meet a wider range of shopper needs and meal occasions, no matter the basket size.”
In terms of category performance, delicatessen (+18.6%) is the fastest growing, followed by health and personal care (+16.2%) and bakery (+10.8%) as people socialised more and returned to the office.
As a result, frozen food sales saw the biggest decline (-14.9%), as well as packaged grocery (-10.1%) and beers, wines and spirits (-6.7%), as consumers returned to visiting pubs, bars and restaurants.
In the past 12 weeks Lidl (+17.3%), Aldi (+9.5%) and M&S (+7.6%) led growth, while Sainsbury (+0.4%) was the fastest-growing retailer out of the ‘big four’ supermarkets, just ahead of Tesco, Asda and Morrisons.
Watkins added: “Looking ahead, the challenge for food retailers is to reassess shopping behaviour now their customers have opportunities to spend elsewhere across leisure, hospitality and travel, particularly when restrictions are permanently lifted at the end of the month.
“However, with the start of warm weather, Euro 2021 on the horizon, and the likelihood of more stay-at-home UK holidays, there will still be opportunities for supermarkets to increase basket spend and improve sales as we head into the summer months.”
Morning update
Food prices have fallen for a second month in a row as supermarkets battled it out to win shoppers – although the rate of deflation slowed from April.
Food deflation decelerated to 0.3% in May, compared with 0.6% in the previous month, according to the latest BRC-NielsenIQ shop price index.
Fresh food prices fell for the sixth consecutive month in May, although deflation slowed to 1% from 1.5% in April. Ambient food inflation accelerated to 0.7% in May, up from 0.6% in April.
Overall shop prices fell by 0.6% last month, a slower decline than April’s decrease of 1.3% and the slowest rate of decline since February 2020.
Non-food deflation continued to slow in May, with prices falling by 0.8%, compared to a decline of 1.7% in April.
BRC chief executive Helen Dickinson said it was another good month for consumers looking for bargains, but the drop in clothing and footwear prices was smaller than earlier in the year as demand picked up following the easing of coronavirus restrictions.
She added that supermarkets fought hard to maintain market share and please thrifty customers by keeping prices low.
“However, cost pressures are bearing down,” Dickison warned.
“Global food prices are currently at their highest in seven years, shipping costs have risen threefold since 2019, and commodity prices are climbing. We will likely see these costs filter through in the second half of this year, and with the additional Brexit red-tape this autumn, retailers may be forced to pass on some of these costs onto their customers. Government can help to ease the burden on British consumers by finding ways to minimise the impact of new checks and documentation required from October.”
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Consumers will be seeing the impact of higher energy and fuel costs in household bills and whilst some cost price increases are coming through the supply chain, this is not yet enough for shop price inflation to return. With high street retailers continuing to offer price reductions and supermarkets promoting seasonal food and drink, this is helping to offset cost of living increases.”
The FTSE 100 continued the positive momentum from yesterday to climb 0.4% to 7,109.30pts this morning.
Glanbia, Coca-Cola HBC, Ocado and Tate & Lyle were among the early risers, while Nichols, Greencore Group, McColl’s Retail Group and SSP Group were among the fallers.
Yesterday in the City
The FTSE 100 got off to a positive start on the first day back after the bank holiday on investor confidence of a global economic recovery.
Quorn owner Monde Nissin edged down 0.2% to 13.48 pesos on its first day of trading on the Philippine Stock Exchange after floating at 13.50 pesos. It valued the noodle maker at $1bn in the largest initial public offering in the history of the Philippines.
On UK markets, there was little in the way of news to drive share price movements during what looks to be a quiet week.
Food and drink risers yesterday included Real Good Food, up 6% to 3.6p, Greggs, up 3.6% to 2,580p, and SSP Group, up 3.6% to 304.6p.
Marks & Spencer, Hotel Chocolat Group and Finsbury Food Group were among the fallers, down 4% to 158.8p, 3.7% to 373.5p, and 3.2% to 91p respectively.
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