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UK Grocery Prices Rising at Fastest Rate in Four Years

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UK Grocery Prices Rising at Fastest Rate in Four Years

UK Grocery Prices Rising at Fastest Rate in Four Years
November 17
09:16 2017

The latest grocery market share figures from Kantar Worldpanel, for the 12 weeks to 5 November 2017, show UK supermarket sales have increased in value by 3.2% year-on-year in the run up to Christmas.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Volume sales have increased by less than 1%, meaning it’s price rises keeping supermarket performance buoyant. Like-for-like grocery inflation now stands at 3.4% – its highest level since November 2013. With the average shop currently costing £18.26, consumers are now paying an extra 62 pence each time and over the course of a year it could add £143.70 to a typical family’s grocery bill.”

The Christmas season has begun in earnest for UK retailers, marked by a flurry of festive adverts in recent weeks, accompanied by inventive product tie ups as grocers look to capitalise on their chosen themes. Fraser McKevitt continues: “Consumers have already been digging deep in preparation for the holiday season, buying 10.1 million packs of traditional Christmas biscuits in October alone.

“Alcohol sales have ramped up too, increasing by 5.3% year on year as shoppers parted with an extra £142 million on their favourite tipples. The British public is only just getting started when it comes to Christmas shopping, and is expected to shell out a whopping £28.7 billion at the grocers in the final 12 weeks of 2017.”

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

Lidl is Britain’s fastest growing supermarket for the fifth consecutive period, with sales up 15.1%. New store openings – and the opportunity they bring to attract new shoppers – have contributed to the impressive performance. Some 10.6 million households visited Lidl at least once during the past three months, boosting the grocer’s market share by 0.5 percentage points to 5.1%. Sales at Aldi – which attracted 11.9 million households during the same period – increased by 13.1%, advancing the retailer’s market share to 6.7%.

Meanwhile Sainsbury’s grew sales by 2.6%, attracting an additional 364,000 shoppers to become the fastest growing among the big four for the first time since April 2016. Fraser McKevitt explains: “Brands were the fastest-selling products at Sainsbury’s during the past 12 weeks – particularly in soft drinks and dairy – flying in the face of the market’s focus on own-label lines. The grocer’s strongest growth came from both its Local convenience stores and online sales. Despite a positive quarter, Sainsbury’s market share fell back by 0.1 percentage points year on year to stand at 16.2%.”

Tesco welcomed 76% of British households during the past 12 weeks, growing sales by 2.3% as its market share dipped to 28.0%: down 0.2 percentage points on last year. Morrisons saw sales increase by 2.1%, accompanied by a marginal fall in share – from 10.5% last year to 10.4% during the latest quarter.

Fraser McKevitt continues: “Asda has enjoyed its eighth consecutive period of growth – the longest run of sales increases the retailer has seen since March 2014. Both cheaper and more premium own label lines delivered an impressive performance to help increase overall sales by 1.5% year on year. Asda’s budget Farm Stores range grew by 88%, while sales of its Extra Special line were up 22%. The grocer will be looking to build on this growth over Christmas and well into the new year.”

Sales at Iceland increased by 1.1%, with share falling slightly to 2.0% – down from 2.1% last year. Nearly half of the retailer’s growth came from categories outside its core frozen ranges, such as alcohol, which grew by 23% thanks to increased listings of wine, lager and cider.

Fraser McKevitt continues: “Amid news that Nisa’s shareholders have backed Co-op’s takeover of the group, there is plenty of room for growth: convenience stores in all their forms currently account for 12.1% of grocery sales. Nearly 60% of UK households currently visit this type of retailer, spending £3.2 billion in smaller stores during the past 12 weeks. Co-op is already the nation’s most frequently visited grocer – shoppers pop in almost twice a week on average – despite having seen sales fall by 1.5% compared to the same period last year.”

Waitrose held market share steady year on year at 5.3%, seeing sales growth across the board: from convenience stores, larger supermarkets and online. Internet specialist Ocado increased sales by 6.8%, growing ahead of the overall online grocery market.

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