Supermarkets fight back

Supermarkets fight back

Tesco has best year-on-year performance this year

For the first time in at least two years, the UK’s leading supermarkets experienced two consecutive months of growth in both money taken at the till and volume of goods sold.

During the four weeks ending 10September 2016, the value of sales was up 0.4%¹ versus the same period a year ago whilst sales volumes increased 0.3%¹. Both metrics haven’t been positive for two consecutive months in over two years. The growth was partly driven by people making more shopping trips which benefited supermarkets with small store formats, in particular.

Alongside this, Tesco had its best year-on-year performance this year, with sales for the 12 weeks ending 10 September down just -0.2% against the same period last year.

With both value and volume growth most weeks since the middle of July we’re seeing the green shoots of recovery for the leading supermarkets in their battle against the discounters and price deflation. A sustained period of good weather and soaring temperatures into September has also helped, as did an improved performance from Tesco, and continued good momentum at the likes of Co-op and Waitrose.

Beverages big winners in last four weeks

The Soft Drinks category saw sales rise +8.3% year-on-year, while Beers, Wines & Spirits experienced a 6.8% increase.

In contrast, Packaged Grocery saw a -4.7% decline in sales as shoppers decided to delay stocking up the larder, instead focusing on outdoor eating and foods for immediate meal preparation. This helped sales in fresh foods rise, such as produce (+3.6%) and delicatessen (+3.4%), as well as contributing to M&S having the highest year-on-year sales increase (+5%) among the leading food retailers, outside the discounters, over the twelve-week period.

Market share battle intensifies

Competition is expected to remain intense, particularly with Tesco and, soon, Morrison’s back in growth. There’s a lot of market share to play for in the £40 billion sales opportunity up to the end of the year. This is why the supermarkets need to maintain price cuts as part of a strategy to win back market share from the discounters who are expected to respond by increasing advertising spend again in the run up to Christmas.

All figures are from Nielsen Homescan Total Till unless otherwise stated
¹Source: Nielsen Scantrack Grocery Multiples