British take-home grocery sales increased by 10.8% compared to the same period last year, according to Fraser McKevitt, head of retail and consumer insight at Kantar. He emphasized that this represents the lowest rate of grocery price inflation seen in 2023, which is a relief for both shoppers and retailers. However, the rise of 16.5% in prices is still significant and the sixth highest monthly figure in the past 15 years. McKevitt further stated that prices are now being compared to the higher rate of grocery inflation observed last summer, indicating that prices should continue to decrease in the coming months, which will be welcomed by all.
The nation’s concern about rising grocery prices is evident, as nearly 70% of households are now ‘extremely’ or ‘very worried’ about food and drink inflation, up from just over two thirds at the beginning of the year. This worry ranks second in significance, narrowly behind rising energy bills. Consumers are taking measures to counter the impact of inflation, with many opting for the cheapest own label lines. As a result, spending on these value ranges has surged by 41% compared to last year, prompting retailers to expand their offerings and meet the growing demand. Interestingly, the value tier has become the fastest growing segment of the market since June 2022.
Moreover, changes in shopping habits are being driven by people’s choices in eating and cooking at home. As the cost of living crisis takes its toll on traditional behaviors, individuals are increasingly opting for simpler dishes with fewer ingredients. Data suggests that people are also shifting away from using ovens in favor of microwaves, reflecting this trend towards simpler cooking.
Additionally, the cost of living crisis seems to be impacting traditional pricing strategies employed by retailers. ‘Round-pound’ prices, traditionally attractive to shoppers, are becoming less common. Evidence suggests that the proportion of products sold for £1, the most popular price point for grocery items, has almost halved from 9% to 5% in a year. Consequently, retailers are adjusting their pricing strategies, with £1.25 emerging as an increasingly important price point, rivaling £2 as the second most preferred price for grocery items.
With the arrival of summer, shoppers are keen to enjoy the sun, leading to a significant increase in volume sales of ice cream and mineral water, up by 25% and 8% respectively last month. However, the higher cost of staying cool has come as a shock, with like-for-like prices on ice cream increasing by 20% and mineral water by 17%. The impact of grocery price inflation is also evident in the prices of barbecue essentials, with fresh sausages rising by 16% and fresh burgers by 13%, further burdening consumers at the checkout.
In terms of market performance, Aldi experienced the highest growth among retailers in the 12 weeks leading to June 11, 2023, with sales rising by 24.6%. This propelled Aldi to achieve a new record market share of 10.2%, representing a 1.2 percentage point increase from the previous year. Lidl closely followed with a sales growth of 23.2% and now holds 7.7% of the market. Morrisons’ sales increased by a modest 0.8%, indicating positive signs for the retailer. Notably, its Morrisons Savers range emerged as Britain’s fastest growing value line, registering nearly double the sales compared to the previous year. Sainsbury’s and Asda outperformed the wider grocery market, with both experiencing a sales growth of 10.0% over the past 12 weeks. Currently, Sainsbury’s accounts for 14.9% and Asda for 13.7% of total sales. Tesco, the largest retailer in Britain, achieved an 8.9% increase in sales, resulting in a market share of 27.1%. Other market players include Co-op with a 5.8% market share after a 3.8% rise in sales, Waitrose with 4.5% of the market following a 3.3% sales increase, and Iceland and Ocado with market shares of 2.3% and 1.7% respectively. Symbols & Independents now hold 1.6% of the market, marking a 2.8% increase from last year.
Overall, the current economic situation has had a direct impact on grocery sales and consumer behavior. Rising grocery prices have led to significant concerns among households, resulting in a shift towards value ranges and simpler cooking methods. Retailers have responded by adjusting their pricing strategies, with an increasing focus on alternative price points. Despite the challenges, certain retailers have managed to perform well, capitalizing on consumer preferences and adjusting their offerings accordingly. As the summer season continues, it remains to be seen how consumers will navigate the impact of rising prices while still enjoying their favorite summer food and drinks.