According to Kantar’s latest figures, grocery price inflation has experienced its sharpest decline since reaching its peak in March of this year. Meanwhile, grocery sales have grown by 10.4% compared to the same period last year. Grocery price inflation decreased by 1.6 percentage points to 14.9% in the four weeks leading up to July 9, 2023. Fraser McKevitt, head of retail and consumer insight at Kantar, explains that this decline in inflation is partly due to increased spending on promotions, which now account for 25.2% of the total market.
McKevitt notes that retailers are focusing more on loyalty card deals, such as Tesco’s Clubcard Prices and Sainsbury’s Nectar Prices, signaling a shift from everyday low pricing strategies. The boost in promotional spending has contributed to the decrease in inflation, but it is also attributed to the comparison with higher rates from the previous year.
Consumers have adapted their shopping habits to combat inflation, either by purchasing cheaper products or shopping at different grocers. Despite the current level of inflation, households have managed to limit their annual grocery bill increase to £330, significantly below the hypothetical increase of £683. Moreover, the trend of larger shopping trips has continued, with supermarket visits only increasing by 1% compared to last year. This shift in behavior is influenced by factors such as working from home, resulting in fewer opportunities for impromptu shopping trips.
In terms of sales, June experienced strong demand for summer essentials as consumers took advantage of the hot weather to enjoy outdoor dining. Sales of barbecue classics, such as chilled burgers and dips, saw a notable increase. Additionally, strawberries and fresh cream sales surged by 16% and 13% respectively, influenced by the spirit of Wimbledon.
Regarding market share, Aldi remains the fastest growing grocer, with sales up by 24.0%. Sainsbury’s has experienced sales growth ahead of Asda and Tesco, marking the first time since January that it has led the pack. Aldi’s market share has increased from 9.1% to 10.2%, while Lidl’s market share rose by 0.7 percentage points to 7.7%. Morrisons, Waitrose, and Co-op also saw growth in their market shares, with Iceland and Ocado maintaining their respective shares.
Overall, these findings highlight the changing dynamics of the grocery market, with retailers adapting their strategies in response to inflation and consumer behavior.
