New data, released today by NIQ (previously known as NielsenIQ), reveals that there has been a decline in sales compared to the previous month. This decline of -7.6% in July 2023 marks a decrease from the +12.4% growth recorded in June 2023.
According to data from NIQ, this drop in sales can be attributed to the unusually high growth experienced in the previous month. Therefore, this decline is actually an expected slowdown in growth. Additionally, factors such as a slowdown in food inflation and trading against previous high comparatives, which included last year’s inflation acceleration, have contributed to this decrease in sales.
NIQ’s data also shows that volume sales at the grocery multiples have weakened, with a decrease of -3.6% compared to the previous month’s -2%. Shoppers have been readjusting their spend ahead of their summer holidays, which has impacted sales negatively. Furthermore, the cooler and wetter weather during the week ending on July 14th has led to fewer occasions for shoppers to socialize and spend on additional items, in contrast to the start of last year’s heatwaves.
Interestingly, July marked the first time shoppers spent less than in a prior period since the seasonal lull in January and last September, which followed the summer heatwaves. This shows a significant change in consumer behavior.
In terms of category performance, there has been a slowdown in growth for dairy products (+9.4%) and frozen foods (+7%) as a result of retailer price cuts. However, there has been an increase in sales of confectionery (+16.5%), packaged grocery (+13.4%), and crisps and snacks (+12.8%), with confectionery seeing the fastest growth.
With rising living costs, more retailers are reducing prices to provide value to households. Consequently, promotional activity has been slowly gaining momentum among shoppers and now accounts for 22.5% of grocery sales, up from 20% in the same period last year. This is the highest level in the past 12 months, except during the Christmas and Easter periods.
Bargain hunting among shoppers has widened the gap between in-store sales (+9.4%) and online sales (+4.3%). Shoppers now spend £800m more in-store than they did at the same time last year. This trend has helped discounters such as Aldi (+22.3%) and Lidl (+17.9%) maintain strong growth, attracting more shoppers.
Notably, these discounters have seen an increase in fresh food sales compared to a year ago, with these categories accounting for over half of the incremental sales growth in the past four weeks.
Regarding consumer behavior, Mike Watkins, NIQ’s UK head of retailer and business insight, said, “Shoppers continue to seek out value by looking for bargains. We’re seeing them become more channel agnostic and less likely to remain loyal to many supermarkets. The value retail channel is becoming a destination for many households for snacks, household, and personal care items, as well as certain branded packaged grocery items.”
Looking ahead, over the next eight weeks, it is expected that there will be a similar pattern of spending with little improvement in volume sales as school holidays commence. The battleground for shopper loyalty is shifting, and retailers must be prepared to build on the trend of shopping little and more often when consumers revert to their usual shopping patterns after the holidays.