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Shoppers will buy less and more carefully this Christmas as the rising price of groceries continues to put pressure on households, according to the latest industry research.
NielsenIQ forecast £34bn will be spent at the supermarkets over the festive period, 4% higher than Christmas 2021 but, with growth driven by inflation, the data analytics firm also expects volumes to fall 4%.
“With the cost of grocery shopping still rising, this is motivating shoppers to shop and buy differently,” said Mike Watkins, NielsenIQ UK head of retailer and business insight.
“With all of the big four supermarkets either giving extra price reductions or adding weekly vouchers to their loyalty schemes, this may prove the catalyst to help grow sales this Christmas.”
Total till value growth increased 5.3% over the last four weeks, up from 4.7% in the previous month. Despite inflation accelerating and shoppers purchasing less, declining volumes have stabilised at –5.4% against –5.6% in the past 12 weeks.
Across the industry, average spend per visit increased to £18.50 compared with £18.20 last month, but is still lower than the same period last year when it was £18.70.
In terms of channel performance, discounters Aldi and Lidl (7.7%) are outperforming convenience stores (4.3%) and supermarkets (3.1%).
However, Asda was the fastest-growing retailer over the 12 weeks ended 5 November with sales growing by 7.6%, while Sainsbury’s recorded 5.1% growth and Tesco came in at 4.8%.
Morrisons and Waitrose were the only retailers to have sales decline compared with this time last year, with Aldi registering growth of 4.5% and Lidl 5.8%.
Watkins added: “There is some better news for retailers and suppliers as shoppers claim they will start to buy some items early for Christmas.
“Our recent consumer survey shows 30% of shoppers will have started their Christmas shopping this year before mid-October compared to 18% last year. Twenty-seven per cent also say they will buy Christmas gifts when they see them in store, which suggests a ‘spreading the cost of Christmas’ mindset is ever more important this year as budgets are stretched.”
Reflecting the wider slowdown in discretionary spending due to inflation, general merchandise value sales fell 1.2% with volumes down 7.6%. Value growth across fmcg for the week ended 5 November was much more robust at 5.1% at the multiples, and the strongest it has been since July’s record-breaking temperatures.
Impulse categories continued to have good momentum as the weather remained unseasonably warm, with crisps and snacks (volumes up 2.9%) and soft drinks (volumes up 0.6%) the only categories to see volume growth in the past four weeks, and with value growth of 13.3% and 9.6% respectively.
According to NielsenIQ data, online sales share may have reached a turning point as the decline has slowed to just –1.2% compared to –7.8% over the past 12 weeks. Online share is now stable at 11.4% share of fmcg sales and increased from an 18-month low of 10.9% in October. It now compares favourably to a 12.2% share this time last year.
Morning update
Profits have tumbled by £463m at tobacco giant Imperial Brands as a result of its exit from the Russian market.
A 14.7% fall in operating profits to £2.7bn in the year ended 30 September was also worsened by a £281m gain in the previous 12 months from the disposal of its premium cigar division.
Revenues at the group also declined 0.7% to £32.6bn as currency swings affected the top line. Net revenues increased 1.5% as the group boosted tobacco sales by 1.3% to £7.6bn and next-generation products by 10.8% to £208m.
Losses on its next-gen products reduced 39.1% to £87m in the year as it continued to invest in the division.
CEO Stefan Bomhard said: “In line with our five-year strategy, increased investment and a more consumer-centric approach have improved delivery in both our priority combustible markets and our next-gen product operations.”
He added: “Looking ahead, we are well positioned to deliver against the next phase of our five-year strategy. The additional investment and the actions we have taken during the initial two-year strengthening phase have built stronger foundations as we face into a more challenging macro-economic environment.
“We are well placed to build on our track record of delivery over the next three years, improving returns and creating sustainable growth in shareholder value.”
Logistics group Wincanton has reported a healthy increase in first-half revenues and profits thanks to ongoing momentum and contract renewals and extensions.
Revenues in the six months to 30 September increased 9.2% to £753.6m, while underlying EBITDA rose 13% to £57.4m and underlying pre-tax profits increased 2.6% to £28m.
Wincanton said it expected to meet market expectations for the full year despite the ongoing macro-economic uncertainty.
CEO James Wroath added: “Wincanton has delivered another good performance during the first half of the year in a challenging macro-economic environment.
“We continued to win new business and made further progress against our growth strategy.”
The FTSE 100 nudged up 0.1% to 7,391.48p this morning.
Shares in Imperial Brands rose 0.5% to 2,048p following its annual results and Wincanton jumped 1.2% to 373p.
Other early risers included Bakkavor, up 5.3% to 98.3p, Kerry Group, up 3.5% to €94.18, and Naked Wines, up 1.6% to 109.3p.
Ocado lost most of yesterday’s gains, falling 8.1% to 851p, HelloFresh is also down 4.5% to €27 and THG is down 3.5% to 74.3p.
Yesterday in the City
The FTSE 100 had a bright start to the week, rising 0.9% to 7,380.31pts.
Shares in Cake Box increased 3.9% to 113.2p despite dwindling first-half profits as the cream cake retailer reported a pick-up in sales growth post-summer.
PZ Cussons rose 0.7% to 205.5p after the group announced it renewed a £325m revolving credit facility.
Risers yesterday were led by Ocado, which soared 13.9% to 924.6p, while Naked Wines rose 9.1% to 108.4p and B&M European Value Retail increased 4.7% to 403.6p.
Oatly collapsed another 12.7% to $2.14 after it downgraded its full-year sales outlook for the third time this year.
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