PACKAGED FOOD ON THE UP, FRESH FOOD SALES DECLINING
The cool and damp weather also influenced sales, as shoppers stocked up on staples such as canned and packet foods, taking advantage of price cuts. Consequently, Packaged Grocery volumes returned to growth (+0.9%) for the first time in nearly a year. Confectionery (+7.6%) and Crisps & Snacks (+4.6%) saw particularly strong growths whilst Bakery, a category with significant price cuts, saw volumes increase +1.9%.
However, when it comes to sales value, deflation continues to depress growths most significantly in fresh food – Meat, Fish & Poultry (-3.2%), Dairy (-2.4%) and Produce (-0.9%) all experiencing declines.
“In a deflationary market, after months of price cutting, lower prices are the norm and less of a factor influencing where consumers choose to shop,” says Mike Watkins, Nielsen’s UK head of retailer and business insight. “Consequently, supermarket growth now relies on attracting new shoppers and driving frequency of visit to build momentum towards the point when inflation eventually returns – probably early in 2016.”
“Morrisons, for example, is currently on the right track. It’s the only one of the Big Four to see a rise in spend per visit over the last four weeks, albeit helped by the anniversary of the start of its price cutting a year ago. Back then, Morrisons was one of the first supermarkets to strategically address the price gap to discounters.”
ONLY TESCO AND ASDA SEE DROP IN YEAR-ON-YEAR SALES
During the 12 weeks ending 23 May, Tesco (-1.7%) and Asda (-2.6%) were the only two among the 10 biggest supermarkets to see a decline in year-on-year sales.
Sales at Sainsbury and Co-operative were flat, whilst the other six all experienced year-on-year growth – led by the discounters Aldi (20.5%) and Lidl (8.6%).
LIDL BIGGEST SPENDER ON TV AND PRESS ADVERTISING FOR THIRD CONSECUTIVE MONTH
In the four weeks ending 23 May 2015, Lidl again spent the most on TV and press advertising (£5.1 million³) – 320% more than the same period last year – just ahead of Asda (£4.8 million).
Lidl’s ads focused on quality and its international food range, as well as their low prices for everyday items.
Lidl also had the biggest increase in ad spend, followed by Marks & Spencer (up 131% to £1.8 million).
Watkins concludes: “With consumer confidence at a nine-year high and a growing economy, food retailers’ fortunes should gradually improve, with summer providing a further boost to spending intentions. Modest increases in advertising spend are also expected. However, more than ever, supermarkets need to work harder to ensure their messages cut through and resonate with shoppers, providing reasons beyond just lower prices.”