‘We are a long way from returning to normal’: UK grocery growth hits record high

Data from Kantar shows that sales of branded products are outperforming the market as shoppers look for ways to treat themselves amid an ongoing reluctance to eat and drink away from home.

UK grocery sales growth reached a record high in the three months to 12 July as the coronavirus pandemic and lockdown restrictions forced consumers to eat at home amid the closure of restaurants, cafes and workplaces.

Sales of groceries were up 16.9% year on year in the 12-week period, according to data from market research firm Kantar, the fastest rate since records began. Online experienced particularly strong growth, with sales up 92% in the four weeks to 12 July. That is equal to 13% of the total grocery market, up from 7% pre-lockdown.

Convenience stores also benefitted from a trend for shopping closer to home. Sales at independent stores were up 59.5%, while the Co-op experienced a sales rise of 30% and Iceland 34%.

The pace of growth has slowed, falling to 14.6% in the most recent four weeks compared to 18.9% in June. And consumers are travelling further to visit a grocer, with distance travelled up 10% to 4.9km compared to the low in April.

Sales of products that were in huge demand as the nation entered lockdown are also almost back to normal, with healthcare sales up just 2% and household products 3%.

But Kantar’s head of retail and consumer insight, Fraser McKevitt, says a “complete return” to normal shopping behaviour is still some way off. Footfall, for example, is still 15% lower than last year, while average spend per trip is 35% higher at £25.05.

Sales of alcohol were still up 42% as consumers remain reluctant to eat and drink out. More than half of consumers say they are still uncomfortable visiting a pub and 42% with visiting a café or restaurant. Shoppers also spent an additional £24m on tea and coffee, and £19m on biscuits over the past four weeks.

“As lockdown restrictions are gradually eased and non-essential retail outlets re-open, some consumers are slowly resuming their pre-Covid routines and shopping habits,” explains McKevitt. “However, we are clearly a long way off a complete return to normality.”

Promotional activity has, however, picked up, with 29% of sales including some sort of discount in the past four weeks. This is still below the pre-Covid level of 31%, but is expected to rise as the grocers look to attract shoppers amid an expected recession and rising unemployment.

Yet the challenging economic climate has not yet impacted the types of items shoppers are buying. McKevitt says branded goods, which are typically more expensive, are outperforming cheaper, own label alternatives – with sales up 20%. And the data shows it is the number one brands in each category typically winning share, while in own label the more premium lines are growing fastest.

“It seems shoppers are looking for small ways to treat themselves at home,” he adds.

How the supermarkets performed

All the big four supermarkets experienced strong sales growth over the 12 weeks to 12 July. Morrisons grew fastest, with sales up 17.4%, meaning it gained market share for the first time since 2015.

Tesco sales increased 15.1%, Sainsbury’s by 13.5% and Asda by 11%.

Iceland’s growth hit a record high of 34.1% and its market share rose 2.2 percentage points to 2.5%. Over the past 12 weeks, the frozen food market in total has increased sales by 22% – the second fastest growth behind alcohol.

Lidl’s sales were up 17.3% and Aldi’s 13%. Waitrose, meanwhile, experienced a sales rise of 10.9%.

Grocery inflation was at 3.6%, continuing a run of rising prices that began in January 2017. Prices are rising fastest in categories including ambient cooking sauces, fresh bacon and canned colas, while falling in fresh poultry, butter and bread.