The volume of groceries sold in UK supermarkets rose by its highest year-on-year rate for 18 months, according to the latest Nielsen retail data, released today.
Shoppers bought 0.8% more groceries in February compared to the same period last year, despite increasing inflation pressures.
“In contrast to non-food retailers, which are seeing weaker consumer demand than a year ago, grocery retailing continues to look positive,” said Mike Watkins, Nielsen’s UK head of retailer insight.
"Much of the credit goes to the grocery retailers who’ve displayed a great balancing act at not passing on too much of the increased supply chain costs to the end shopper. As a result, consumers in general don’t feel the need to hold back on grocery shopping.”
'Big Four' Growth
According to the latest Kantar Worldpanel figures, also released today, Tesco and Morrisons were the best performers out of the UK's 'Big Four' supermarkets in the most recent trading period.
Tesco remains the country’s biggest supermarket group, with 27.9% market share, followed by Sainsbury’s (16.2%), Asda (15.6%), and Morrisons (10.6%).
However, Aldi and Lidl remain the fastest-growing grocery retailers in the UK, and now account for a combined market share of 12.1%.
“Good news continues for the 'Big Four'," said Watkins. "Tesco and Asda are still attracting more shoppers, Morrisons growth was good - even against a good performance last year - and whilst Sainsbury has the lowest growth, visits and spend per visit are increasing.”
"Things suggest that the strategy of the major supermarkets to target improving like-for-like sales, being less reliant on new stores for growth and reducing operating costs to help invest in lower prices, could be the green shoots of a sustainable recovery."
Challenging Market
Looking at the overall retail market, however, UK household spending was subdued last month, as pound-stretched shoppers remain cautious.
In February, UK retail sales increased by 0.6% on a like-for-like basis from February 2017, when they had decreased 0.4% from the preceding year, according to the British Retail Consortium (BRC).
Over the three months to February, food sales increased 2.8% on a like-for-like basis, however, non-food sales decreased by 1.1%.
“The headwinds to retail spending continued to blow strong in February," said Helen Dickinson, chief executive of the BRC.
"Inflation is still eating into shoppers’ budgets, pushing them to spend a greater share of their income on essentials and leaving less left over to buy discretionary, predominantly non-food, retail items."
However, Paul Martin, head of retail at KMPG, noted that retailers experiencing any growth in this environment "will be counting themselves lucky."
"Total growth of 1.6% in February is quite an achievement in such testing times," he said. "Softening consumer demand, rising costs for retailers and of course the ongoing structural changes within the industry, are creating the perfect storm which is uprooting the weakest players."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
