Supermarkets see first sales growth for nearly a year

Supermarkets see first sales growth for nearly a year

Euro 2016 boosts alcohol and crisps sales. Brexit unlikely to change shopper behaviour in the short-term

UK supermarkets saw their first genuine increase in year-on-year takings at the tills since July 2015, according to Nielsen retail performance data released today.

During the four weeks ending 18 June 2016, the value of sales was up +0.4%¹ versus the same period a year ago. The last time sales value increased year-on-year (excluding an Easter-inflated period) was the four-weeks ending 18 July 2015. Furthermore, it’s only the third genuine year-on-year rise since the start of 2014. Sales volume remained flat (0.0%¹) for the second consecutive period.

It remains a tough trading environment for the big supermarkets but changes made over the last year in lowering prices, less promotions, edited ranges and improved customer service seem to be having an impact, alongside the drop in shoppers buying cheaper grocery brands to save money Furthermore, deflation is no longer deepening and, with the effect on figures of some store closures last year soon to be behind us, we can be more optimistic about a supermarket recovery later this year.

The amount of the average supermarket shopping bill going on promotional items has remained at 29% for three months and with Sainsbury’s proactively leading the move to permanent price cuts and away from ‘multi-buy’ offers, it looks like the industry is attempting to make this the new baseline for promotional spend.

Euro 2016 lifts alcohol and crisps sales

The first week of Euro 2016 helped Beers, Wines & Spirits increase +6.2% year-on-year during the four-week period, whilst Crisps & Snacks rose +4.2%. In addition, the warm end to May contributed to Delicatessen sales rising +3.9% and General Merchandise +2.9%.

Regarding the other major European event this month, whilst the Brexit decision is unlikely to change shopper behaviour in the short term, we can expect some change in consumer sentiment and, possibly, a return to low inflation next year – should sterling’s depreciation continue and global commodity prices strengthen. However, for now, the battle for market share continues and shoppers will benefit from falling prices at food retailers due to price cuts and the deflationary environment.

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