Grocery spend slows alongside Brexit uncertainty and rising living costs
Consumers are reining in their spending at the big four supermarkets due to Brexit uncertainty and rising living costs, according to the latest Nielsen data.
Consumer spending in the grocery sector has continued to slow for the third consecutive month with sales up 1.2% in the last four weeks, below the predicted rate of 1.9% and down from 2.5% last month, according to the data.
The continued slowdown is being attributed to several factors including the increased costs of living from rises in energy and fuel prices, to the upcoming increase in council tax. Extended uncertainty over Brexit negotiations is also causing shoppers to tighten their grocery budgets.
The data shows shoppers are spending less at the ‘big four’ supermarket chains (Tesco, Sainsbury’s, Morrisons and Asda) and this has led to a rise in sales at the discounters Aldi and Lidl, whose combined market share in the last 12 weeks totalled a high of 16%. Over the same period the combined share of the top four supermarkets was 64.1% compared with 65.6% last year.
Analysts point to a more positive few weeks ahead with seasonal promotions expected to boost sales of drinks, as well as confectionery and snacks.
Mike Watkins, Nielsen’s UK head of retailer insight, said: “We can see that the last few weeks have continued to be challenging for retailers. However, there should be brighter times ahead, with Easter on the horizon bringing attractive seasonal promotions to encourage shoppers to spend more on confectionery, snacks and drinks. If this is accompanied by warm spring weather and more clarity over the status of Brexit, this will help to kick-start growth for the big supermarkets and boost sales in time for summer.”
Over the past 12 weeks the grocery retailers which recorded the biggest rises in sales (compared to the same 12 weeks in 2018) were Aldi (up 14.7%), Lidl (up 9.8%), Iceland (up 3.6%), The Co-op (up 2.5%) and Waitrose (up 1.2%).
The big four, and Marks & Spencer, struggled to grow sales over the period, compared to 2018.
Watkins said: “The first quarter of 2019 has shown a continued slowdown in consumer spending on grocery, with the average household spend each week on groceries amounting to £71, back to the level last seen in October 2017.
“This means that grocery spend remains broadly unchanged in the last 18 months despite inflation. We can see a change in shopping behaviour as well as a shift in sentiment as households shop around to make savings.”