UK supermarkets experience a significant slowdown in sales, the lowest since January.
- Total Till sales growth dropped to 7.2% in the period leading up to mid-August.
- Primary factors include reduced inflation and unpredictable summer weather affecting shopping habits.
- Retailers increase promotional spend by 23% to boost consumer spending amidst economic challenges.
- Discounter retailers continue to gain popularity, with Tesco, M&S, Aldi, and Lidl expanding market share.
In the four weeks leading up to 12 August, UK supermarkets experienced a notable reduction in sales growth, recording a 7.2% increase—the lowest since January. This slowdown is linked to factors such as easing inflation rates and unseasonably unsettled summer weather, which have impacted consumer shopping patterns and reduced store visit frequency.
To counteract this trend and stimulate consumer spending during the ongoing cost-of-living crisis, retailers have ramped up their promotional activities. Spending on promotions has increased by 23% compared to the previous period, supported by targeted price reductions and the strategic use of loyalty cards to enhance customer savings.
Despite the overall slowdown, certain retailers have managed to grow their market share. Tesco achieved a 9.7% rise in sales over the last 12 weeks, with M&S, Aldi, and Lidl also recording increases in their market presence. This trend is further supported by the continuing consumer preference for discount retailers, which have attracted over 780,000 new shoppers compared to the previous year.
Conversely, Morrisons and Co-op exhibited weaker growth, with sales rising by only 1.7% and 2%, respectively. This situation reflects broader challenges within the supermarket sector, as highlighted by the NIQ UK head of retailer and business insight, Mike Watkins. He noted that volume declines have been partially due to influences like summer holidays and unpredictable weather conditions.
Watkins elaborated on the broader economic challenges facing the industry, pointing out increasing mortgage and rental pressures faced by many households. These factors suggest that a recovery in consumer sentiment may be delayed, adding difficulty for retailers and manufacturers in achieving Fast-Moving Consumer Goods (FMCG) volume growth as inflation continues to ease.
The evolving economic pressures and consumer behaviours present continued challenges for UK supermarkets in maintaining sales growth.
