Rampant inflation means customers buying fewer, cheaper items
Thursday 23 Jun 2022 Author: Ian Conway

The latest supermarket ‘till roll’ from Kantar for the 12 weeks to mid-June makes for more unhappy reading for the industry and consumers.

Total sales by value in the period, which included the Platinum Jubilee celebrations, shrank by 1.9% due to a more than 10% fall in the number of items purchased.

Offsetting the fall in volumes was a further spike in inflation which reached a record 8.3% in the last four weeks of the period.

Sales growth has been negative for over a year now, partly due to the surge in supermarket food spending during the pandemic when we were all eating at home but also due to the rising cost of living.

Based on Kantar’s own data, the average annual grocery bill is on course to rise by £380 this year compared with last year.

‘This is over £100 more than the number we reported in April this year, showing just how sharp price increases have been recent and the impact inflation is having on the sector’, said Fraser McKevitt, head of the firm’s retail and consumer insight.

The only two retailers to show an increase in sales, predictably, were the German discounters Aldi and Lidl, with rises of 7.9% and 9.5% respectively.

Both retailers predominantly sell own-label goods, which is contributing to the overall rise of private-label products at the expense of branded products.

Kantar also flagged the increase in popularity of supermarket own-label value ranges, with sales surging by 12% over the period.

Interestingly, more shoppers seem to be opting to visit stores rather than shop online, possibly to avoid expensive delivery charges.

On 17 June market leader Tesco (TSCO) disappointed the market with a first quarter trading update which revealed UK like-for-like sales were down 1.5% in the three months to the end of May.

On 5 July, smaller rival Sainsbury’s (SBRY) is due to update investors on its first quarter, during which its market share shrank to 15% from 15.3% a year ago and its sales fell roughly 10% according to Kantar.

Year-to-date, Tesco shares are down 13% and Sainsbury’s shares are down 24% while the FTSE 100 is down just 4.5%.

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