Consumer finances improve but grocery sales slow

Poor weather and falling inflation have led to take-home grocery sales slowing to their lowest increase in two years.

Grocery sales rose by just 1 per cent over the four weeks to 9 June 2024, figures from Kantar show, marking the slowest increase since June 2022. Growth in footfall has also stalled, with the average shopper visiting a supermarket 16.3 times this month, down from 16.4 in June last year.

Fraser McKevitt, head of retail and consumer insight at Kantar, explained: “The sixth-wettest spring on record hasn’t just dampened our spirits leading into summer, it’s made a mark on the grocery sector too as it seems Britons are being put off from popping to the shops.”

Consumer finances improving

While it might be contributing to slower market growth, a drop in grocery price inflation is leading to improved consumer sentiment, McKevitt noted. The rate now stands at 2.1 per cent, marking the 16th consecutive month that it has fallen. Some 36 per cent of households described their financial position as comfortable in May 2024, a proportion not surpassed since November 2021.

McKevitt stressed that the cost-of-living crisis is far from over – 22% of households say they’re struggling – but there are undeniable green shoots.“There are positive signs that many of us no longer feel the need to restrict our spending quite so much, with lower inflation helping to ease the pressure on people’s pockets,” he continued. ”In May, we recorded the largest jump in the number of comfortable households since January 2023, rising by two percentage points on February 2024’s figure.

“Costs are falling in nearly one third of the grocery categories we track. That’s a big increase from last year, when just 1 per cent of markets were declining.”

With the men’s European Football Championships underway, the supermarkets will be waiting to see if positive performances by England and Scotland can deliver a win at the tills too. Retailers will be competing with fans heading out of the house to watch the football as well as with each other, with pubs especially set to benefit from a boost.

Ocado continues its march

Ocado was the fastest-growing grocer for the fourth month in a row this period, increasing sales by 10.7 per cent over the 12 weeks to 9 June. That’s ahead of the total online market, which saw sales rise by 4 per cent. Nearly a quarter (23%) of British households did their grocery shopping online in the last three months, with over 4 per cent choosing to use Ocado. 

Lidl increased its hold of the market by 0.4 percentage points to 8.1 per cent, matching its sales growth for the latest 12 weeks. Fellow discounter Aldi, the fourth-largest retailer by consumer spend, boosted sales by 0.8 per cent and now has a share of 10 per cent.

Tesco achieved its highest market share since February 2022, growing 0.6 percentage points to 27.7 per cent and pushing up sales by 4.6 per cent. Sainsbury’s saw its sales rise by 4.9 per cent to account for 15.2 per cent of the market, up from 14.9 per cent last year.