Supermarket sales spark as festive shopping gets underway

According to research company NIQ, total till sales rose 4.7% in the four weeks to 5 October, up on the previous month’s 4% rise.

Within that, general merchandise edged ahead 0.2% - the first growth for 12 months – while fast moving consumer goods (FMCG) volume growth was 1.4%.

NIQ said the increase total till sales was “likely due” to shoppers starting to snap up seasonal products, as retailers rolled out Halloween and Christmas ranges.

The generally warm and sunny start to September also helped, with in-store visits jumping 7.6%, well ahead of the 2.5% rise in online shopping occasions.

Mike Watkins, UK head of retailer and business insight at NIQ, said: “Even with higher disposable income for some households, shoppers still need a catalyst to spend.

“Retailers will be looking to the traditional advertising campaigns in a couple of weeks’ time to really get shoppers into shopping mode, as a way to boost weekly sales in the final eight weeks of the golden quarter. Shoppers will look to spend more after the half-term holiday [at the end of October].”

Among individual supermarkets, Ocado Group and Marks & Spencer saw the biggest jump in sales in the 12 weeks to 5 October, up 15.9% and 12.4% respectively.

Tesco, the UK’s largest grocer by some distance, with a market share of 26.2%, reported a 5.3% improvement in sales. Nearest rival J Sainsbury saw revenues jump 5.5%.

Asda, which has been hit hard by the rapid expansion of discounters Aldi and Lidl, reported a 3.1% decline in sales, the only grocer to see a fall.

Lidl sales surged 11.2%, but Aldi’s edged up just 0.7%, as it came up against tough comparatives.

Clive Black, head of consumer research at Shore Capital, said: “While the new government is showing a worrying degree of continuity from the prior useless Conservative regime, and there will be much for grocers to ponder on in the Budget…we like the sales momentum recorded going into the important Christmas period.

“M&S, Sainsbury and Tesco look well set, backed by very strong balance sheets.

“Mix improvements support gross margin while efficiency moves ameliorate the pressures of higher costs. All-in-all, the environment to sustain…onward earnings growth and handsome free cash generation, most of which is going to shareholders, remains sound.”