After the frenetic promotional activity of June and early July, food retail sales are returning to a semblance of normality as we enter the summer holiday period.
Top-line retail sales growth for the grocery multiples in the 12 weeks to 15 July was 5.3%, driven by strong consumer demand for drinks and fresh foods, outperforming the underlying market growth of the past 12 months.
Not surprisingly, the star growth categories have been soft drinks and liquor, but retailers have also benefited from a strong demand for fresh foods including bakery, produce, dairy and delicatessen and fresh meat/fish/poultry.
The retailers that have capitalised on sunshine and sport in the most recent 12 weeks are Waitrose, Tesco, and Sainsbury's - with sales growth of 12%, 9% and 7% respectively on Homescan Total Till. Asda's sales growth was 4%. Morrisons, despite a stronger performance since Easter and momentum on like-for-like sales, failed to match the top-line growth of the others.
Somerfield's share has tracked at a consistent 4.3% for grocery, now that all Kwik Save conversions have been completed, and the co-operatives have continued to grow share slowly. Iceland has been one of the big losers.
While most major retailers have generated strong sales in the past 12 weeks, the growth in Tesco's share has slowed. Although it is 1.1% up on this time last year, its total market share since Easter has grown more slowly, from 29.1% to 29.3% .
Mike Watkins, head of retailer services at ACNielsen, comments: "Year-round event promotions have become commonplace and provide enormous sales momentum across the whole industry. While Tesco probably had the biggest opportunity due to its scale, the World Cup frenzy has benefited all of the top six, and there has been an acceleration in sales growth."
The use of mega-promotions to drive volumes is key for out-of-town retailers such as Tesco and Asda. This has given a boost to both spend and shopper penetration. For high street retailers, however, range, customer service and availability is the key to success. Here the promotional mechanic needs to be more focused and the reward more immediate as the average basket is still under £20 per visit.
By the end of the year, achieving like-for-like sales growth above the current average of 3.9% [Scantrack] may be just a memory.