Meal deal options help grocery market grow

The latest grocery market share figures have shown that supermarket sales for the 12 weeks ending 26 February have grown at their fastest rate since June 2014, as more than £9 million was spent on meal deals compared to last year’s period. 

Figures from Kantar Worldpanel showed that retailer sales were up 2.3% on the same timeframe for 2016. While bacon prices experienced a decrease in price, much of the overall success for the supermarkets was attributed to rising prices.

“Like-for-like inflation has doubled since last month to stand at 1.4% during the past 12 weeks,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel. “However, when placed in their longer-term context, these price increases are still fairly minimal.

“Staples such as butter, tea and fish all saw prices rise by more than 5% during the past 12 weeks, as fruit and vegetables – many of which are imported – also saw an uptick in price. However, it is important to point out that inflation is still far from universal, with prices actually falling across a number of categories including crisps, bacon and eggs.”

McKevitt explained that while consumers may be feeling a slight pinch in their wallets, increased inflation has been beneficial to the market. “Simultaneously, combined sales at the UK’s four largest supermarkets increased by 0.5% year on year,” he added. “This is a timely reminder that despite the huge interest in the discounters during recent years, the big four remain a force to be reckoned with: they still hold just over 70% of the market, with 99% of the population shopping at a Tesco, Sainsbury’s, Asda or Morrisons during the latest quarter.”

Shopping habits were also highlighted as an area of change over time, with the proportion of groceries sold on promotion falling from just over 40% of sales in 2015, to 34.3% over the past 12 weeks. This is its lowest level since October 2009. Shoppers have drifted away from multi-buy promotions, with consumers spending £0.5bn less on these types of deals than last year.

“Despite the general move away from multi-buys, meal deals remain popular – particularly around Valentine’s Day,” commented McKevitt. “Premium meal deals, which offer dinner for two at a price of £10 or above, were bought by nearly two million consumers in February as Valentine’s Day offered a welcome opportunity to splash out.

“In fact, British diners spent £9m more on premium meal deals than during the same period last year, suggesting that celebrating special occasions at home is an increasingly appealing option. A total of 1.2 million shoppers bought still light wine as part of their premium meal deal, 700,000 plumped up for sparkling wine and 840,000 bought chocolates.”

Morrisons demonstrated its fastest growth in five years after increasing sales by 2.6%. Holding its market share year on year at 10.6%, the supermarket was assisted by a rapid expansion in its e-commerce business.

Tesco also saw mixed success, after increasing sales for the sixth period in a row, something it hasn’t enjoyed since January 2014. However, this wasn’t enough to stop the retailer’s market share slipping by 0.5% to 27.9%.

Asda was the only firm to see its sales fall during the past 12 weeks, although a 0.8% decline still reflected a significant improvement and it is the grocer’s best performance since November 2014.

McKevitt added: “To the catchy soundtrack of its new ‘food dancing’ advertising campaign, Sainsbury’s returned to growth for the first time since March last year, with sales up by 0.3%. At the same time, its market share slipped by 0.3 percentage points, leaving the grocer with 16.5% of the market. Lidl became Britain’s fastest-growing supermarket during the past 12 weeks – with sales up by 13% – while Aldi grew almost as quickly, increasing sales by 12.9% to reach a record market share of 6.3%. Also growing ahead of the market was Iceland, with sales up 8.8%. Meanwhile The Co-operative and Waitrose increased sales by 1.7% and 2.9% respectively.”

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