Asda and Morrisons were the only two of the big four grocers to see positive sales growth over the past quarter as the grocery market grew at its slowest rate since March 2017, according to the latest Kantar Worldpanel statistics.
Despite the uncertain political climate taking its toll on consumer confidence, shoppers are still willing to spend a bit extra on more expensive goods and Kantar said Christmas spending is expected to break records.
Leeds-based Asda was the best performer out of the big four with sales growth of 1.5 per cent in the 12 weeks to December 2. Bradford-based Morrisons saw growth of 0.5 per cent, whilst market leader Tesco was down 0.1 per cent and number two player Sainsbury’s was down 0.2 per cent.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “There’s quite a lot of momentum going with Asda. They have had a couple of very rough years a few years ago.
“Everyday low pricing has become more of a reality and their standard own label lines are growing faster.
“Asda and Morrisons have significantly underperformed in their top tier label so they are now seeing double digit growth for premium own label.”
He said that Morrisons is promoting far more than other retailers.
“At Morrisons, 47 per cent of sales are on some kind of deal. The market average is 33 per cent,” said Mr McKevitt.
“A significant proportion of customers like the excitement of a deal and it makes them buy new products.”
He said that although the retail mood is gloomy, shoppers seem determined to splash out at Christmas.
“Growth has slowed and November was a relatively slow growth month, but there’s still enough momentum to have a record Christmas. We expect December sales could be £10bn,” said Mr McKevitt.
“Nobody wants to cancel Christmas. Grocery shopping is not discretionary. Normal grocery shopping has to be spent.”
Kantar said the last time Christmas Day fell on a Tuesday was in 2012 and the Saturday before was the busiest shopping day of the year.
“We expect the same trend to hold true this year, with Saturday December 22 pulling in the last-minute Christmas crowds,” said Mr McKevitt.
“Because of the way Christmas falls, grocers have an extra trading day this year meaning overall sales in December – up to and including Christmas Eve – could reach £10bn.
“Total premium own-label lines are growing at 5.5 per cent, which could lead to record sales in this price tier of £1.1bn over the 12-week period.”
Kantar said there are already tell-tale signs of a bumper Christmas: over the month of November, sales of festive favourites jumped as shoppers began stocking up in preparation for Christmas. More than one in eight households have already bought a Christmas pudding, while boxed chocolate and Brussel sprout sales have reached £292m and £18m respectively.
The grocery market figures show the sector is now growing at 2.0 per cent – its slowest rate since March 2017.
Mr McKevitt said: “Consumers are benefiting from falling inflation. It now stands at 1.6 per cent – less than half the rate of inflation in December 2017, when it reached 3.6 per cent – leading to a slowdown in the overall market.
“Over the summer, shoppers upped their weekly trips to the grocers as they took advantage of the hot weather, but with the mercury dropping the number of trips has tailed off.”
Black Friday saw footfall to the entertainment, toy and electrical retailers nearly double, but had little impact on the supermarkets. While the majority of households did take part in Black Friday, e-commerce trumped bricks-and-mortar shopping.
Analysts Nielsen said retailers could see 4 per cent growth on last year if shoppers spend a predicted £7bn in the crucial two week period to December 29.
Despite weak consumer confidence in relation to spending on big ticket items, Nielsen said retailers should be comforted by the fact that people were more willing to spend on food and drink.
Mike Watkins, Nielsen's UK head of retailer insight, said: "It's been a slow start to Christmas in 2018, and in particular for the grocery multiples.
"The good news is that we still expect shoppers to spend on seasonal treats and indulgences as well as premium food and drink when shopping and to enjoy the festive season with family and friends. This will provide some much-needed sales momentum in particular for the big supermarkets."