Grocery sales falling more slowly in last four weeks

Data outlet Kantar said it was apparent that the Covid-19 pandemic was still having an impact on people’s spending as grocery sales remained 9.9% higher in the latest 12 weeks than in 2019.

“In the past month grocery sales were just 0.5% lower than this time last year - the best four week ending market performance since April,” said Fraser McKevitt, head of retail and consumer insight at Kantar.

“In monetary terms at least, we seem to be in a similar place to 12 months ago, but if we dig deeper into the data we can see that our shopping habits are actually very different.

“With the end of social distancing restrictions people have been happier to head into stores to make more regular, smaller shops.”

McKevitt said consumers made an extra 108,000 shopping trips this month, although average basket sizes were 10% smaller.

A gradual return to “more traditional” behaviour was also affecting online grocery sales, after the take-up of online grocery shopping grew rapidly during the pandemic, with a “divide” beginning to emerge since the easing of restrictions.

Fraser McKevitt said some shoppers were sticking with online ordering, making purchases regularly and spending on average more than two-thirds of their total grocery bill online.

But the “unconverted” were starting to drop away, preferring to get back in stores instead.

“Just over 20% of the population bought groceries online in the latest 12 weeks, the lowest level we’ve seen since October last year, while the share of grocery sales made online now stands at 13.0%, down from a peak of 15.4% in February.”

That shift away from online contributed to sales at online retailer Ocado seeing its sales falling by 0.7%, making for its first decline on record.

“Ocado’s growth is now comparing against the rapid expansion it enjoyed in 2020 so it’s not altogether surprising that we’re now seeing a small dip,” McKevitt said.

“It’s still a positive outlook for the online specialist though - Ocado has retained 1.8% of total grocery sales, the same as last year, and sales are up by 44.4% compared with 2019, the fastest two-year growth in the market.”

Other retailers, including Amazon, were continuing to explore online opportunities, after Amazon announced earlier in the week that it would be adding its own branded groceries to its UK website, supplementing its existing tie-up with Morrisons.

McKevitt said that could bring its offer more in line with British shopping habits in general, saying that the British public was among the world’s “most reliant” on retailer own label brands.

Currently, 11% of Amazon’s grocery sales are own label lines, well below the 50% market average.

“If there’s one pandemic habit that has stuck it is perhaps that cash-free payment is now king - another trend Amazon has been trying to capitalise on,” Fraser McKevitt said.

“Across major grocery retailers, 87% of payments are now made by card rather than with cash.

“As we shift to cashless payment methods, retailers have been looking to make purchasing as seamless as possible.”

Amazon recently launched camera-equipped “just walk out” stores, while Tesco announced last week that it was preparing to introduce its first till-less shop, with McKevitt saying Kantar expected more retailers to follow suit.

Like-for-like grocery prices had been falling since April, with the trend continuing over the latest 12-week period as they dropped by 0.8%.

However, the past four weeks painted a slightly different picture, with inflation growing by 0.4%.

“Although relatively low, this four-week level of inflation would still add £19 to the average household’s annual grocery bill,” said Fraser McKevitt.

“It’s expected that inflation will rise again in the coming months, and as a result we’ll likely see shoppers seeking to tighten the purse strings and save where they can.”

Waitrose was the only grocer to increase sales in the past 12 weeks, with growth of 0.6% as it attracted 365,000 more shoppers than it did last year.

The retailer expanded its market share by 0.2 percentage points, up to 4.9%, while Tesco’s share of grocery sales increased by 0.6 percentage points from 26.6% to 27.2%, its largest year-on-year share gain since 2007.

Sales were bolstered by its premium ‘Finest’ range, which rose by £29m.

Sainsbury’s share also nudged up by 0.3 percentage points to give it 15.2% of the market, while Asda saw a 17% jump in the number of shopping trips compared with last year, now holding 14.2% of grocery sales.

Meanwhile, Morrisons’ share dipped to 10.0%, with sales falling by 6.2% as they were measured against a strong performance last year.

Limited-assortment discounters Aldi and Lidl both gained market share, with Aldi holding 8.2% of the market, and Lidl 6.1%.

Co-op and Iceland, two of the “standout performers” of Kantar’s data in the past 18 months, saw sales fall year-on-year, now having market shares of 6.6% and 2.3%, respectively.