Consumers face difficulty

This morning Kantar reports that grocery price inflation again rose to reach 17.1% in the four weeks to 19 February 2023, the highest level ever recorded by Kantar. Overall take-home grocery sales increased by 8.8% during the four weeks and by 8.1% over the 12-week period.

Fraser McKevitt, our head of retail and consumer insight, comments: “Shoppers have been facing sustained price rises for some time now and this February marks a full year since monthly grocery inflation climbed above 4%. This is having a big impact on people’s lives".

Here are the facts:

• After energy costs, grocery price inflation is the second most important financial issue for consumers
• Sparkling wine sales doubled and an additional £5 million was spent on boxed chocolates for Valentine's Day
• Aldi's market share is now 9.4%.

Commenting on this report, Phil Durham, UK Commercial Director at Atlante UK comments: 

“The second half of 2022 was all about producer input inflation. What we’re seeing now is the inevitable flow through to retailers and consumers.  This has been coming for 12 months and is a combination of multiple factors including geo-political instability, environmental impacts, supply & demand imbalances, and national economic policy.  However, we’re starting to see this ease, for example, energy prices, petrol prices, and demand. This softening of producer input inflation will flow through to the retailer and the consumer in time, however, how quickly is hard to forecast.”

Fruit & Veg Shortages

We reported last week about issues that shoppers have been facing in the fruit and vegetable aisles. Due to supply chain issues, some supermarkets have been rationing the number of cucumbers or tomatoes that a consumer can buy. Usually, 43% of all grocery baskets contain at least one fresh produce item, pack limits are unlikely to drastically affect consumers as we usually buy fruit and veg in smaller quantities. For instance, only 1% of tomato purchases last year involved more than three packs.

Valentine's Day

Consumers were still keen to celebrate Valentine’s Day this February. With Valentine’s Day falling on a Tuesday and many feeling the pinch, some shoppers decided to show their love at home this February. Supermarket sales of steak rose by a quarter in the seven days to 14 February compared to the previous week, while chilled ready meal sales were nearly one-third higher. Sparkling wine sales also doubled, and an additional £5 million was spent on boxed chocolates. Illness – a Valentine’s gift nobody wants – could also have encouraged at-home celebrations, as sales of cold treatments rose by 82%, cough liquids by 78% and cough lozenges by 70% this month.

Aldi & Lidl 

Aldi is still the fastest-growing grocer, with a market share that now stands at 9.4%, with sales up by 26.7%. Lidl increased sales by 25.4% and its share of the market now stands at 7.1%. Frozen food specialist Iceland also won share, taking 2.4% of market sales, up from 2.3% last year as spending through its tills increased by 10.8%.

Ocado put in a strong performance, bucking the overall trend in online sales. While online fell by 0.9% over the 12 weeks, the digital specialist grew sales by 11.3% to achieve its largest ever market share of 1.9%.

Tesco edged slightly ahead in the battle between Britain’s biggest retailers, with sales up by 6.6%. Sainsbury’s and Asda were just behind with sales rising by 6.2% and 5.9% respectively. Morrisons’ sales decline of 0.9% was its best performance since May 2021.

Waitrose returned to growth, nudging up sales by 0.7%. It has a market share of 4.7%. Convenience retailer Co-op increased sales by 3.4% while independents and symbols were up by 1.8%.

Supermarkets and shoppers are adapting to manage rising prices. The battle to offer best value for consumers continues in this intensely competitive sector, particularly as the traditional retailers look to protect market share from the discounters. Own label ranges have been one obvious focus and shoppers have consistently bought them over brands since February last year. Sales of these lines are up by 13.2% this month, well ahead of branded products at 4.6%, a trend that shows little sign of stopping.

To learn how Atlante can help you, download our own brand guide:

This article first appeared on Kantar.com