New data released by analysts NielsenIQ has revealed a cautiously optimistic end to summer as shoppers got back into the routine of the new school term, as well as having an eye on the approaching festive season.
Total till sales at UK supermarkets grew by 4.1% in the last four weeks ending 6th September, it reported. This is up from a rise of 3.7% recorded in August, signalling the end of the summer holidays as shoppers shifted focus, also looking forward to Christmas celebrations. The growth was also likely supported in part by rising inflation.
Cautious of rising household bills, retailers were reluctant to pass on the full cost of business or supply chain pressures, as consumer demand remained transient and relatively weak, NielsenIQ reports. As a result, sales of items purchased under promotions increased slightly to 23.5% of sales, with shoppers leaning on loyalty card discounts to secure the best deals.
Looking at category trends, meat, fish and poultry saw a strong increase, with total sales up 9.2% and units rising by 1.6%. Soft drinks also performed well, with sales up 10.6%, and units purchased up 4.4%, supported by the sunny weather at the end of August.
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Following the hottest summer on record, which encouraged spending and sustained food and drink sales, the industry now faces the challenge of navigating higher inflation. One in three households currently identify the cost of living as their top concern, up from 22% in March, while nearly two-thirds of shoppers report being moderately or severely affected by rising costs, compared with 56% a few months ago.
”As households switch their heating back on and prepare for additional spending ahead of Christmas, most consumers anticipate that financial pressures are set to increase further.”
Watkins added: “Looking ahead, with many shoppers unable, unwilling or reluctant to spend freely, if food inflation reaches 5% or more by the end of the year, this could limit some of the volume increases typically seen during the Golden Quarter.
“For retailers, three key challenges lie ahead - securing sales growth in the face of rising inflation to drive volume, encouraging trading up across different shopping missions and ensuring that media messages and forthcoming advertising campaigns resonate with increasingly price-sensitive consumers.”
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