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Grocery sales growth slowed in November as shoppers delayed spending on food and drink to take advantage of seasonal promotions during Christmas week.

New data from NIQ (previously known as NielsenIQ) showed total tills sales at UK supermarkets slowed to 6.8% in the four weeks to 2 December despite a significant rise in promotional activity.

Sales volumes were also a little weaker this last month at -0.9%.

As inflation slows, promotional activity rose to 25% from 23% last year, with 38% of branded sales across all fmcg goods in the last four weeks purchased on promotions and 16% of private label, pushing promotional spend to the highest level since February 2020.

Price cuts and promotions now back to pre-pandemic levels, NIQ said.

NIQ data also reveals strong value sales growth (8.2%) for online grocery shopping compared with in-store shopping (5.3%) boosting online market share to 11.5% up from 11.2% last month.

This growth is in line with NIQ predictions for the Christmas period as consumers look for ways to plan their shopping in advance, budget for their Christmas shop as well as the colder weather discouraging shoppers to visit stores.

Grocery sales growth expected to peak over the seven days to 24 December with shoppers likely to spend up to £5bn making this the biggest ever week for food sales.

In terms of retailer performance, Sainsbury’s (9.5%) was the best performing supermarket of the ‘big four’ over the last 12 weeks. Tesco was up 7.8%, with Morrisons’ growth overtaking Asda as the former grew at 3.5% compared with 3.3% at Asda.

Lidl (up 17.3%) and Aldi (14.3% ) continue to maintain their position as the fastest-growing retailers with M&S (up 12.8%) and Ocado (11.7%) also showing steady growth.

On a category basis, shoppers are taking advantage of promotions and stocking up on fresh foods and sweets to enjoy the holidays. Sales for meat and poultry (10.1%) soared, making it the fastest-growing category. Confectionery sales (+10.2%) also indicated shoppers’ interest in treating themselves.

Mike Watkins, NIQ’s UK head of retailer & business insight, said: “We know that almost ¾ of households think retailer promotions are important when choosing where to make their grocery shop at Christmas. NIQ research also shows that loyalty points play a significant role in helping shoppers save money over the festive period with over half of shoppers look for personalised loyalty card prices and promotions and 38% cash in loyalty points saved throughout the year.

“The good news is this will help shoppers celebrate the festive season and treat themselves to some premium food and drink and seasonal indulgences but this year value for money will be even more important. The key for retailers is to get the basics right to dish up a successful Christmas; low price, quality, and availability are the top drivers that are important to shoppers when planning where to do their main Christmas grocery shop.”

Morning update

The Competition & Markets Authority has opened a probe into Unilever around claims of “greenwashing” and how it markets its products to customers as environmentally friendly.

Earlier this year the CMA examined the fmcg sector as part of its work on environmental claims and uncovered a “range of concerning practices”.

As part of that work, the CMA has today launched a formal investigation into Unilever.

The CMA will examine whether certain statements and language used by Unilever appear vague and broad, and may mislead shoppers regarding the environmental impact of those products.

It was also look at whether claims about some ingredients are presented in a way that may exaggerate how ‘natural’ the product is, and so may create an inaccurate or misleading impression or if focusing on a single aspect of a product may suggest it is environmentally friendly as a whole.

Additionally, the CMA will look at whether certain green claims – particularly in relation to recyclability – may be unclear, as they fail to specify whether they relate to all or part of a product, or packaging.

Finally the CMA will consider Unilever’s use of colours and imagery – such as green leaves – which may create the overall impression that some products are more environmentally friendly than they actually are.

CMA CEO Sarah Cardell said: “Essentials like detergent, kitchen spray, and toiletries are the kinds of items you put in your supermarket basket every time you shop. More and more people are trying to do their bit to help protect the environment, but we’re worried many are being misled by so-called ‘green’ products that aren’t what they seem.

“So far, the evidence we’ve seen has raised concerns about how Unilever presents certain products as environmentally friendly. We’ll be drilling down into these claims to see if they measure up. If we find they’re greenwashing, we’ll take action to make sure shoppers are protected.”

The CMA has contacted Unilever and will use its information-gathering powers to obtain further evidence to progress its investigation.

“How the case unfolds will depend on what the evidence shows,” the CMA said. Possible outcomes include securing undertakings from Unilever that commit the firm to change the way it operates; taking the company to court; or closing the case without further action.

The CMA did note it has seen some positive changes in the fmcg sector since announcing its compliance review, including amendments to and removal of some green claims made by a number of suppliers.

However, its review identified a range of concerns and, while the CMA has not opened official investigations into other companies at this point, its work is ongoing and new investigations may follow.

Elsewhere, European discount retail group and Poundland owner Pepco Group posted record revenues of €5.65bn last year, but has experienced a slowing of sales in recent months.

In a “record” year for the group, revenues in the year to 30 September were up 17.7% on a constant currency basis to €5.65bn.

The growth was primarily driven by the Pepco brand, with the chain up 24.8%, while Poundland’s growth was 8.4%.

The group’s bottom line performance was less stellar, with underlying pre-tax profit of €202m down 33.7% at constant currency, reflecting investment in stores, expansion and related supply chain costs, alongside higher inflation and higher interest costs

Underlying EBITDA of €753m was up 3.1%.

Overall sales performance was supported by the opening of 668 net new stores (826 store openings and 158 store closures).

Although the group will now take a “more disciplined approach to growth”, with new store openings focused on our existing markets and 400 net new store openings planned for the current financial year.

Pepco opened 556 net new stores during the 2023 financial year. This includes 294 net new stores in CEE and 262 net new stores in Western Europe, the chain’s fastest growing region.

The group said that there remains a significant white space opportunity in its core CEE markets, particularly outside Poland.

Additionally, the group said it saw strong potential in the UK discount space over the coming years, as one of the largest markets in Europe, which is forecast to grow quicker than Germany and France.

To take advantage of this, it will accelerate the opening of new Poundland stores and selectively refresh its existing estate to deliver an “enhanced customer experience”.

Poundland opened 53 stores during the year, while closing 51 underperforming stores as part of its long-term estate management plan.

In September 2023, Poundland agreed to take control of up to 71 Wilko store leases in the UK. By early mid-December 2023, 64 former Wilko stores had already been reopened as Poundland stores, with 10 stores opening in the 2023 financial year and the balance at the start of 2024.

However, since year end group-wide trading has been “mixed”.

Overall, the group saw like-for-like revenues decline by 3.1% in the eight weeks to 26 November 2023, against a strong trading period in the prior year, although it is seeing sequential improvements week-on-week.

For Pepco, the impact of unusually warm weather conditions on trading carried through to the early weeks of October across some geographies. Poundland, like-for-like sales are slightly above the same period last year, reflecting a strong performance in fmcg and weaker performance in clothing, due to disruption as the business transitions from Pep&Co to Pepco-sourced apparel.

The group expects more challenging trading conditions in its 2024 financial year, but remains “cautiously optimistic” about trading prospects.

In particular a m­ore disciplined control on operating costs and line-of-sight on easing input costs, including commodity and freight, is aimed at rebuilding margins back to pre-pandemic levels.

CEO Andy Bond commented: “Despite a challenging market backdrop, we delivered another year of strategic progress and record sales of €5,649m, against a strong prior year comparative.

“That said, our overall performance was mixed with a disappointing profit outturn. As we laid out at our Capital Markets Day in October, we are acting decisively to address this, reaffirming our strategy to deliver more measured growth – doing less, to achieve more – with a greater focus on improving profitability and cash generation. This includes a more targeted approach to new store openings in existing markets, and our renewed focus on transitioning into one single business through a unified customer offer and sourcing strategy, helping us drive enhanced cost and operational efficiency.

“We also committed to the UK as the group’s largest market. Our ambition is to continue the strong progress made by the team, such as the ongoing enhancement of Poundland’s proposition, including introducing clothing powered by Pepco in stores, alongside its extensive fmcg range that is appreciated by customers.

“Looking ahead to 2024, while we expect industry-wide short-term sales challenges to continue, we are cautiously encouraged by recent third-party data pointing to an expected easing of certain pressures on household budgets, particularly in Central and Eastern Europe.

“We also continue to expect gross margin recovery throughout the year, and are already seeing encouraging signs here. The Group has a market-leading customer proposition, a strong balance sheet, and resilient operating cash flow to continue success across Europe.

“The opportunities in our core markets remain significant, and we will leverage them in a more targeted way, with an enhanced emphasis on capital, returns, and free cash flow, helping to grow the business in line with our renewed strategy.”

On the markets this morning, the FTSE 100 is up 0.5% to 7,585pts.

Early risers include Bakkavor, up 3.3% to 86.8p, THG, up 2.3% to 88.3p and Ocado, up 1.8% to 643.6p.

Fallers include Kerry Group, down 2% to €74.52, Science in Sport, down 1.9% to 11.5p and Nichols, down 1.1% to 1,073.1p.

Yesterday in the City

The FTSE 100 opened the week down 0.1% to 7,544.8pts.

McBride was a notable risers yesterday, with the private label cleaning goods player jumping 19.4% up to 86p.

Other risers included Nichols, up 8.5% to 1,085p, Wynnstay, up 8% to 365p, Naked Wines, up 4.3% to 39.7p, THG, up 3.8% to 86.4p and SSP Group, up 2.5% to 234.4p.

Fallers included PZ Cussons, down 3.2% to 143.4p, Hilton Food Group, down 1.9% to 732p, British American Tobacco, down 1% to 2,292.5p, Diageo, down 0.7% to 2,809.5pand Coca-Cola Europacific Partners, down 0.4% to €59.25.