Shoppers sought out private label and dine-in deals during February as budgets remained under pressure, according to NIQ data out this morning.
Total till sales at UK supermarkets increased 3.3% in the four weeks to 21 February, but volumes declined by 0.8% – a bigger fall than January’s 0.6%.
Inflation continued to ease slightly in the month, decelerating from 3.9% to 3.5%. However, budget-conscious shoppers are now purchasing less and altering buying habits.
In addition, the impact of a decline in consumer confidence (GfK’s index fell to –19 in February, from –16 in January) was felt by food retailers, with a reliance on shoppers spending more around the key calendar events during this period, including half term, Valentine’s Day, Pancake Day and the run-up to Chinese New Year.
Consumers spent £42m on rice, grains and noodles, as well as purchasing more accompaniments to make up a celebratory Chinese New Year meal occasion, spending £6.8m on oriental cooking sauces (+10.9%) and £3.4m on fresh savoury snacks (+32%).
As part of the seasonal dine-in deal offers, shoppers spent £58.5m on own-label ready meals (+3.4%), with 45% being premium SKUs, as an alternative to eating out.
For the first time in over a year, NIQ data showed a dip in the frequency of shopping, alongside a growth in the number of items in the basket, helped by e-commerce. NIQ said that 35% of all growth in fmcg sales since the start of the year had come from online, which remained the fastest-growing channel in terms of value sales growth (9.2%) and continued to increase its market share, which stood at 14.2%.
The reluctance to spend was illustrated with only three super-categories in unit growth: dairy (2.2%), produce (1.3%) and meat/fish/poultry (0.4%). This is supported by data that shows 33% of shoppers are changing the way they shop to save money, rising to 58% for those who feel severely impacted by the cost of living.
And the gap between own-label unit growth (+1%) and branded volumes (–2.2%) continued to widen, with 15% of households switching to save money, 16% choosing cheaper brands and 18% shopping more at discounter stores.
Ocado, which grew sales 14.4% in the 12 weeks to 21 February, continued to gain market share, retaining its position as the fastest-growing retailer, followed by Lidl (+9.9%).
Helped by their respective offers for Valentine’s Day, both M&S (+6.5%) and Waitrose (+6.1%) also gained share, and the frequency of store visits was higher than last year.
Asda and Co-op were the only retailers with negative sales growth in the period, down 4% and 0.6% respectively.
“Many retailers focused on attracting shoppers with a choice of dine-in deals to capture a bigger share of spend at out-of-home channels, with premium offers such as three courses for two people for £25 setting a new and attractive price point compared to eating out,” said Mike Watkins, head of retailer and business insight at NIQ.
“In fact, there was a small increase in basket size in the last four weeks and whilst it is too soon to say if this is a turning point in shopper behaviour, these big events encouraged shoppers to spend more and it’s possible that some are bringing some spend forward to help manage budgets ahead of Easter.”
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