The uncertain trading environment for UK grocers was compounded by the release this week of market share figures from Nielsen and Kantar Worldpanel.
Nielsen data found supermarkets posted their first increase in year-on-year takings since July 2015 in the four weeks ending 18 June as sales were boosted 0.4% by Euro 2016 and good weather.
But that positive picture was contradicted by Kantar Worldpanel figures for the 12 weeks to 19 June, which showed the market slipping into decline for the first time since January, with sales down 0.2%.
The Kantar figures were down from 0.1% growth in the previous 12-weeks and found the big four in negative growth. Tesco sales fell 1.3%, Sainsbury’s 1.4% , Morrisons 2.4% and Asda 5.9%.
Kantar’s finding of a return to market-wide falling sales is especially sobering as the period covered pre-dates the EU referendum result and the resulting upheaval.
One potential impact of Brexit could be rising prices to reverse the two year-plus trend of deep deflation. There were signs deflation was easing even before the EU referendum result: Kantar found food deflation eased from 1.5% in the past two 12-week periods to 1.4% in the 12 weeks to 19 June, which itself is significantly lower than the Office of National Statistics’ Consumer Price Index figure of 3.2% deflation.
Mike Watkins, Nielsen’s UK head of retailer and business insight, said: “Deflation is no longer deepening and, with the effect on figures of some store closures last year soon to be behind us, we can be more optimistic about a supermarket recovery later this year.” “It remains a tough trading environment for the big supermarkets, but changes made over the last year in lowering prices, less promotions, edited ranges and improved customer service seem to be having an impact”.
Grocery sales outside the big four remain relatively buoyant, with Kantar finding Aldi and Lidl’s sales up 11.5% and 13.8% respectively, Iceland up 3.5% and the Co-op with 2% growth.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, warned Brexit may continue the shift away from the big four if Brexit leads to higher prices. “Historically, higher prices have led to consumers looking for less expensive alternatives such as own-label products, seeking out brands on promotion or visiting cheaper retailers,” he said.
Nielsen and Kantar collate their value sales figures differently, with Kantar monitoring the grocery purchasing habits of 30,000 British households while Nielsen tracks total store sales for 15,000 shops.
However, the overall discrepancy between Nielsen’s four-week data and Kantar’s 12-week figures is also partly attributable to the effect of the early Easter this year, which acted a drag effect for the Kantar numbers against the comparable period in 2015.
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