According to the latest data from Kantar, take-home sales at UK grocers increased by 1.8% over the four weeks to 23 March compared with a year ago, marking the slowest rate since June 2024. Grocery price inflation rose slightly to 3.5% over the same period, with shoppers turning to promotions to save money.
“With prices continuing to rise, supermarkets are mindful of the need to invest to attract shoppers through their doors,” said Fraser McKevitt, head of retail and consumer insight at Kantar. “Promotional sales ramped up this month to 28.2% of total grocery spending, the highest level we’ve seen in March for four years.”
The data shows that retailer price cuts were responsible for £2.6bn of promotional spending, 8.8% more than the same time last year and significantly higher than the £686m spent on multibuy deals and ‘extra free’ offers. McKevitt added: “Despite the recent surge, we’re still some way off the promotional records hit in the wake of the financial crisis. Average spending on deals in 2012 was 39.8%, meaning there could still be more headroom to go. However, the market has changed a lot in that time, with the discounters holding a far higher share today than they did 13 years ago.”
Kantar noted that retailers battling to deliver value will be welcome news for households who remain worried about their financial situation. A recent survey by the research firm found that while the number of people reported as financially struggling has fallen from its peak of 27% in October 2022, this still accounts for almost a quarter (22%) of the country. “The rising cost of groceries ranks third on the list of concerns keeping consumers awake at night, just behind energy bills and the country’s overall economic outlook,” said McKevitt.
Despite financial concerns, consumers are still finding ways to treat themselves. Last month, sales of chocolate eggs and seasonal confectionery reached £134m, and over a third of households bought hot cross buns, even though Easter isn’t until late April.
As Aldi prepares to celebrate the 35th anniversary of its first store opening in the UK on 5 April, its share of the grocery market hit 11.0% for the first time over the 12 weeks to 23 March. This was up 0.3 percentage points from last year after its sales grew by 5.6% – the fastest rate for the discounter since last January.
Lidl’s sales rose by 9.1%, taking its market share to 7.8%, 0.4 percentage points higher than a year ago. It attracted 385,000 more shoppers last month, more than any other grocer, and saw a double-digit rise in footfall.
Ocado was again the fastest-growing grocer, a position it has held for the last 11 months, after its sales increased by 11.2%. For the first time, the online retailer took a 2.0% portion of the market. Spending on groceries at M&S increased by 13.1%, on top of M&S goods sold through Ocado.
Tesco saw spending through its tills rise by 5.4%, nearly half a billion pounds more than the same period a year ago. The UK’s largest grocer made the biggest share gain, with its portion climbing from 27.3% to 27.9%. Sainsbury’s reached 35 consecutive periods of year-on-year growth, with sales up by 4.1% as it grew ahead of the market. Its share nudged up to 15.2%.
Despite its turnaround efforts, sales at Morrisons were up only 0.6%, and its market share slipped to 8.5%. Meanwhile, Asda’s price rollback campaign appears not to have yet had a significant impact on its performance, with its market share declining to 12.5% after a 5.6% fall in sales.
NamNews Implications:
- The key standout is the Tesco-Sainsbury’s-Aldi-Lidl growth in market share, largely at the expense of Asda and Morrisons.
- Moreover, increases in sales performance across the board is being ‘bought’ via price promotion.
- With possibly more of the same as Autumn Budget tax increases now begin to bite in April.
- Suppliers need to anticipate the probability that retailers will now want (need?) them to share some more of the promo-cost of encouraging uncertain shoppers to spend.
- Any reluctance by brand owners runs the risk of more consumers turning to own label alternatives…
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