UK retailers bask in pre-Christmas price hike

By Niamh Michail contact

- Last updated on GMT

© GettyImages/Pixfly
© GettyImages/Pixfly
Prices in UK supermarkets are rising at the fastest rate in four years, according to figures from Kantar Worldpanel.

Supermarket sales have increased in value by 3.2% year on year in the run up to Christmas, according to the latest grocery market share figures from the market analyst company, which cover the three-month period running until 5 November 2017.

The number of items being shifted, however, has increased by less than 1%.

“[This means] it’s price rises keeping supermarket performance buoyant,” ​said head of retail and consumer insight at Kantar Worldpanel Fraser McKevitt.

Like-for-like grocery inflation now stands at 3.4% – its highest level since November 2013. With the average shop currently costing £18.26, consumers are now paying an extra 62 pence each time and over the course of a year it could add £143.70 to a typical family’s grocery bill.”

British supermarkets have begun preparing for the Christmas period, seen in the flood of Christmas adverts and themed products, and consumers are biting (or should that be buying?) the bait.

Alcohol sales have increased by 5.3% year on year, which Kantar Worldpanel estimates to be worth an extra £142 million, and consumers bought 10.1 million packs of traditional Christmas biscuits in October alone.

“The British public is only just getting started when it comes to Christmas shopping, and is expected to shell out a whopping £28.7 billion at the grocers in the final 12 weeks of 2017,” ​said McKevitt.

Battle of the brands

So which supermarkets are performing best in the pre-Christmas period?

The rising star in the British retail sector continues to be German hard discounter Lidl which, for the fifth consecutive period, is the fastest growing supermarket, registering a 15.1% increase in sales.

“New store openings – and the opportunity they bring to attract new shoppers – have contributed to the impressive performance,"​ said McKevitt. "Some 10.6 million households visited Lidl at least once during the past three months, boosting the grocer’s market share by 0.5 percentage points to 5.1%. Sales at Aldi – which attracted 11.9 million households during the same period – increased by 13.1%, advancing the retailer’s market share to 6.7%.”

The rise of hard discounters in the UK, and the almost universal appeal they hold across diverse socio-economic consumer groups, recently prompted market researchers at Mintel to declare that “Brits are never too posh to push a discount trolley​”​.

Senior Mintel research analyst Nick Carroll believes this is in large part down to discounters’ efforts to ‘premiumise’ some products, such as wine and locally sourced fruit and vegetables.

Nevertheless, branded products are still much in demand. Sainsbury’s saw its sales rise by 2.6%, attracting an additional 364,000 shoppers to become the fastest growing among the top four supermarkets for the first time since April 2016. McKevitt put this down to the pull of brands.

Brands were the fastest-selling products at Sainsbury’s during the past 12 weeks – particularly in soft drinks and dairy – flying in the face of the market’s focus on own-label lines. The grocer’s strongest growth came from both its Local convenience stores and online sales. Despite a positive quarter, Sainsbury’s market share fell back by 0.1 percentage points year on year to stand at 16.2%.”

Related topics: Market Trends

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