Shoppers have been facing sustained price rises for some time now ,and this February marks a full year since monthly grocery inflation climbed above 4%
Grocery price inflation rose again to reach 17.1% in the four weeks to 19 February 2023, the highest level ever recorded by market research company Kantar Worldpanel. Overall take-home grocery sales increased by 8.8% during the four weeks and by 8.1% over the 12-week period.
Shoppers have been facing sustained price rises for some time now, and this February marks a full year since monthly grocery inflation climbed above 4%. This is having a big impact on people’s lives.
Kantar research found that grocery price inflation is the second most important financial issue for the public behind energy costs, with two-thirds of people concerned by food and drink prices above public sector strikes and climate change. One in four say they’re struggling financially, versus one in five this time last year. The numbers speak for themselves. If people don’t change how they buy their groceries, households are facing an £811 increase to their average annual bill.
Supermarkets and shoppers are adapting to manage rising prices. The battle to offer the best value for consumers continues in this intensely competitive sector, particularly as traditional retailers look to protect market share from the supermarket discounters. Own label ranges have been one obvious focus, and shoppers have consistently bought them over brands since February last year. Sales of these lines are up by 13.2% this month, well ahead of branded products at 4.6%, a trend that shows little sign of stopping.
So which supermarkets are the most popular with UK consumers?
Aldi pushed its market share to a new record this period hitting 9.4%. It remains the fastest growing grocer, with sales up by 26.7%. It was closely followed by Lidl, which increased sales by 25.4%. Lidl’s share of the market now stands at 7.1%. Frozen food specialist Iceland also won share, taking 2.4% of market sales, up from 2.3%, last year as spending through its tills increased by 10.8%.
Ocado put in a strong performance, bucking the overall trend in online sales. While online fell by 0.9% over the 12 weeks, the digital specialist grew sales by 11.3% to achieve its largest-ever market share of 1.9%, although the retailer has just announced it made a loss in the last year of some £4M, so it needs some serious sales growth to get back into profit.
Tesco edged slightly ahead in the battle between Britain’s biggest retailers, with sales up by 6.6%. Sainsbury’s and Asda were just behind, with sales rising by 6.2% and 5.9%, respectively. Morrisons’ sales decline of 0.9% was its best performance since May 2021.
Waitrose returned to growth, nudging up sales by 0.7%. It has a market share of 4.7%.
Convenience retailer Co-op increased sales by 3.4%, while independents and symbols were up by 1.8%.
With supermarkets such as Waitrose investing £1M in their own brands and 300 everyday ranges, and supermarkets such as Iceland investing heavily in its cheaper priced products, such as £1 lines, its possible that the supermarkets offering less impressive discount food to consumers may start to feel the pinch of consumers switching to different supermarkets to save money.
However, supermarket own brand value products, many much publicised as a cheap way for families to eat over the past few months, have seen the cost of producing food soar to levels that can't be subsidised any longer.
According to Which?’s latest supermarket food and drink tracker, price increases for value foods/ranges was 21.6%, far outstripping branded groceries which rose by 13.2% year on year.
Which?’s findings show that while basic ranges will still generally offer lower prices, people relying on the cheapest food at the supermarket are being hit disproportionately by inflation compared to those who buy premium or branded foods.
When Which? looked at some of the worst individual examples of price increases on supermarket budget own-brand items, it found the cost of everyday staple items had surged over 12 months.
Information courtesy of Kantar & Which?