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UK grocery sales growth fell back sharply in July as price inflation continues to ease, according to the latest market share figures from Kantar.
Kantar found that take-home grocery sales growth fell back to 6.5% in the four weeks to 6 August, from 10.4% in the previous month.
That was driven by a further 2.2 percentage point decrease in grocery price deflation to 12.7% over the same period as the market laps the beginning of strong inflation in 2022.
“The latest slowdown in price rises is the second sharpest monthly fall since we started monitoring grocery inflation in this way back in 2008,” said Fraser McKevitt, head of retail and consumer insight at Kantar.
“Prices are still up year on year across every supermarket shelf, but consumers will have been relieved to see the cost of some staple goods starting to edge down compared with earlier in 2023. Shoppers paid £1.50 for four pints of milk last month, down from £1.69 in March, while the average cost of a litre of sunflower oil is now £2.19, 22 pence less than in the spring.”
On an individual retailer basis, Tesco and Sainsbury’s outperformed the market with growth of 9.5% and 9.3% respectively over the longer 12-week period.
Asda’s sales were up 9.3% over the period, with Morrisons up 2.3%.
Aldi remained the fastest-growing grocery retailer with sales up 21.2%, followed by Lidl at 19.8%.
Co-op was up 3.4%, Waitrose, 4.4% and Iceland 6.7%.
Own-label goods remained popular in the latest four-week period, with sales up by 9.7%, while branded products rose by 6.4%.
McKevitt added: “Own-label sales continue to outpace branded, although the gap between the two is closing. Buying supermarket lines is just one of the ways people have been trying to save money at the tills and we can see the impact on how much they are spending.”
Hopes of some sunshine were dashed this July as unseasonable weather put the dampeners on sales of our usual summer favourites. McKevitt said: “It was a better month for Barbie than barbecues this July as the rain put a spanner in the works for many consumers’ outdoor plans – a stark comparison to last year when we experienced the hottest day on record. Volume sales of ice creams were down by 30%, while soft drinks sales were nearly a fifth lower than 12 months ago.
“Instead of our usual summer fare, it seems we’ve been turning to more traditional winter warmers. The amount of soup bought has gone up by 16% year on year, while roasting joints have grown by 5%. Cooler temperatures and a wetter than average month may have also put people off from venturing to the shops. Footfall was down for the first time in 18 months with people making 320,000 fewer trips to physical supermarkets than a year ago.”
For the longer 12-week period grocery inflation now stands at 14.4%, with prices rising fastest in markets such as eggs, frozen potato products and sugar confectionery.
Morning update
Marks & Spencer has upgraded earnings expectations after a strong start to its new trading year.
In an unscheduled trading update, the retailer said the first 19 weeks of the year had seen continued market share growth in both the clothing & home and food businesses, and good progress on the programme to reshape M&S.
Like-for-like food sales grew over 11% in the period, driven by further investment in quality and trusted value, sharpening prices on over 80 ‘Remarksable Value’ lines.
Meanwhile, like-for-like clothing & home sales grew over 6%, with strong growth in stores, and more subdued growth in online. Sell through rates have been robust and stock into sale was lower than planned.
Overall, group operating margin has continued to be “robust”, driven by strong store performance and enhanced by its store rotation and renewal programme.
M&S cautioned that there remain “considerable uncertainties” about the economic outlook, and there is a risk that the consumer market will tighten as the year progresses.
Nevertheless, it now expects the outcome for the year to show profit growth on 2022-23, and the interim results to show a “significant improvement against previous expectations”.
Interim results, for the 26 weeks ending 30 September will be reported on 8 November 2023.
Elsewhere, Domino’s Pizza Group has announced that Usman Nabi will step down as a director of the company with effect from 14 August 2023.
Nabi is founder and managing partner of Browning West, which continues to be a significant shareholder in DPG.
He joined the board of DPG in November 2019 and since then has played in important role in supporting the transformation of the business. In particular, he played an instrumental role in the searches for a new chair in 2020 and, most recently, a new CEO, culminating in the recent appointment of Andrew Rennie.
Matt Shattock, chair, said: “On behalf of the board, I’d like to thank Usman for his contribution, which has been vital during a period of great change in the business. I look forward to continuing to engage with Usman and his team as a major shareholder in the business.”
Nabi added: “I joined the board of Domino’s because I wanted to play a role in putting a world-class leadership team in place. With Matt Shattock as chair and our new CEO Andrew Rennie in place, I now believe this has been achieved and so it is the right time for me to step down from the board. As a shareholder I look forward to continuing to engage with the company as it moves to the next level.”
On the markets this morning, the FTSE 100 has lost 1% to 7,432.1pts on stronger than expected UK wage growth data and higher than expected unemployment levels.
Risers include Marks & Spencer, up 8.3% to 221.7p after this morning’s trading statement, Bakkavor, up 4.5% to 105.5p and Virgin Wines, up 2.7% to 38p.
Fallers include Glanbia, down 3% to €13.78, Nichols, down 2.2% to 1,009.6p and McBride, down 2.2% to 38.4p.
Yesterday in the City
The FTSE 100 opened the week 0.2% down to 7,507.1pts.
Fallers included THG, down 5.3% to 97.4p, Ocado, down 4.3% to 796.2p, Greencore, down 2.8% to 86.2p, Virgin Wines, down 2.6% to 37p, Deliveroo, down 1.8% to 125.1p, PZ Cussons, down 1.8% to 164.6p and Bakkavor, down 1.5% to 101p.
The day’s risers included B&M European Value Retail, up 3% to 554p, Domino’s Pizza Group, up 1.9% to 407p, Coca-Cola-HBC, up 1.7% to 2,326p, Marks & Spencer, up 1.2% to 204.7p and Fever-Tree Drinks, up 1.1% to 1,338p.
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