Weaker-Than-Expected Growth in October Puts Pressure On Grocers Ahead of Christmas
Grocery spend has slowed in October 2018 to half of what it was at the same time last year, putting pressure on supermarkets’ Christmas ad campaigns and promotions to pull in customers. New data shows headline growth in the last four weeks was +1.5%, compared with +1.9% during the previous four-week period, and a stark contrast to the +3.1% for the equivalent period last year.
As inflation is broadly the same as it was this time last year, the caution that shoppers are displaying in other retail and leisure sectors may be influencing spend in grocery.
However, in-store Christmas promotions are making an impact in the final week of this latest period measured. Consumers are already making the most of in-store alcohol offers, typically the first in-store promotion to be introduced by retailers in the pre-Christmas period. In the week ended 3 Nov., the first indication of a seasonal sales uplift came through in the beers, wines and spirits category, with value growth of +4.9% and +8% for sparkling wines*.
Both in-store promotions and media campaigns are more crucial than ever for supermarkets this Christmas to entice shoppers into their stores and ramp up consumer spending. Interestingly, so far this year, the major food retailers have spent 13% less on above the line media, with Tesco the biggest spender, and only Asda and Aldi are spending more than a year ago**.
While the full impact of Christmas promotions and advertising will be felt in four weeks’ time, we expect to see some inspiring and distinctive campaigns designed to drive sales. With weaker-than-expected growth in October, the industry is under pressure to get shoppers into the habit of spending more over the next six weeks by showcasing what’s new and different in store.
Looking at retailer performance, comparing the last 12-week period and the same period in 2017, within the top four supermarkets, Asda is still the fastest growing (+2.5%), followed by Morrison’s (+1.2%). Tesco’s growth (+0.3%) remained ahead of Sainsbury’s (-0.6%).
All figures are from Nielsen Homescan Total Till unless otherwise stated.
*Nielsen Scantrack Grocery Multiples for 1 week to 3/11/18
**Nielsen AdIntel, FMCG TV, press, radio, OOH and cinema spend. January 2018 to September 2018.