Supermarket Christmas sales ‘hit by triple whammy’

By Michael Stones

- Last updated on GMT

Related tags Retailing Grocery store Lidl Aldi

The leading supermarkets’ Christmas sales were hit by a triple whammy, said Nielsen
The leading supermarkets’ Christmas sales were hit by a triple whammy, said Nielsen
Supermarkets’ Christmas sales were hit by a triple whammy – leading to the lowest sales growth for at least seven years – while discounters Lidl and Aldi boosted their takings, according to market research company Nielsen.

The leading retailers were hit by slowing food inflation, weak consumer demand and a shift in shopping habits, said Nielsen’s UK head of retailer and business insight Mike Watkins.

“The end of 2013 was a difficult time for the major supermarkets who were hit by a triple punch,”​ he said. “First, in-store food inflation is now less than half it was a year ago, 1.7% compared with 4.1% in December 2012.

“Second, the strong finish to the year wasn’t enough to offset weak consumer demand in the six weeks to early December, which was fuelled by cost of living concerns.”

Online grocery shopping

The third blow was shoppers’ changing behaviour. “Consumers are adding online grocery shopping to their repertoire of ‘stores’ used, as part of a lifestyle change to make shopping more convenient and help manage household budgets,” ​he said. “From mid-October to the first few days of January, consumers spent 27% more on groceries online and 28% more at food discounters than a year ago.”

Despite shoppers spending £5bn at the UK’s leading grocers in the two weeks to January 4 2014 – a 13% increase year-on-year – aggregate sales value growth during the four weeks to January 4 were up by just 1.7% year-on-year. Unit, or volume sales, fell by 1.2% year-on-year.

But there were bright spots within the bleak trends for major retailers. ‘Indulgent’ categories that sold well were: confectionery up by 8.8% value year-on-year and beer, wines and spirits up by 5.3%.

Crisps, snacks and meat, fish and poultry rose by 2.7%.

Discounters Lidl and Aldi

Meanwhile, discounters Lidl and Aldi enjoyed a very happy Christmas.

Aldi recorded a 33% sales increase, while Aldi’s sales rose by 24%. Both rises were fuelled by big rises in spending on advertising. Lidl had the biggest year-on-year increase in spend, up by 77% to £3.2M, while Aldi had the third biggest increase in advertising spend, up by 38% to £6.4M. Iceland boosted its advertising spend by 66% to £2.2M.

“Advertising played a key part in shaping where consumers shopped, with Lidl and Aldi significantly increasing their investment in advertising, and both were successful in attracting new shoppers,”​ said Watkins.

“Aldi was the outright winner in sales growth this Christmas, suggesting that the right customer offer, well communicated, is the secret to success in this highly competitive and disloyal market.”

Aldi and Lidl both benefited from shoppers spending more across a wider range of ambient, frozen and chilled foods this Christmas, he added.

The UK’s 10 leading supermarkets spent 5.9% more on TV and press advertising in the four weeks to January 4 – totalling £44.1M – than in the same period a year ago. 

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