Kantar’s latest report reveals a nuanced economic landscape in which Britons are reducing their supermarket and summer expenditures, even as grocery inflation declines.
- Supermarket prices were 2.1% higher than a year ago, marking the 16th consecutive month of slowing price rises.
- Despite a reduction in inflation, significant financial pressures persist, affecting consumer spending behaviours.
- Unseasonably wet weather has dampened sales of summer-related products, highlighting the impact of external factors on consumer behaviour.
- Promotional activities around Euro 2024 present potential opportunities for supermarkets and pubs to boost sales.
In the four weeks to 9 June, supermarket prices saw a 2.1% increase from the previous year, a slight decrease from May’s 2.4% inflation rate. This marks the 16th consecutive month of slowing grocery inflation. Kantar’s data indicates that costs have fallen in nearly a third of the categories monitored, such as toilet tissue, butter, and milk, which contrasts sharply with last year’s data showing price declines in only 1% of categories.
Fraser McKevitt, head of retail and consumer insight at Kantar, stated that despite the reduction in grocery inflation, the cost of living crisis isn’t over—far from it. He pointed out that 22% of households reported struggling to cover expenses or just making ends meet. McKevitt remarked, 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. However, sales rose by a mere 1% in June, the slowest increase since June 2022, and footfall also declined.
The unseasonably wet weather has had a significant impact on consumer behaviour, with sales of summer-related products such as sun care items and prepared salads dropping by nearly 25% and 11% respectively compared to the previous year. Conversely, sales of fresh soup increased by almost 24%, underscoring how external climatic factors can influence purchasing patterns. McKevitt commented, the sixth wettest spring on record hasn’t just dampened our spirits leading into summer; it’s impacted the grocery sector too, with Britons seemingly deterred from frequenting the shops.
Supermarkets and pubs are looking to capitalise on the Euro 2024 tournament to enhance consumer spending. Promotional activities around beer and lager have surged by over 40% in the last four weeks. According to McKevitt, retailers will be competing with fans heading out of the house to watch the football as well as with each other. Pubs, in particular, are expected to benefit from increased foot traffic whether or not England or Scotland progresses in the tournament. Historical data from the last tournament in 2021 showed a significant 60% rise in sales of food and non-alcoholic drinks in pubs compared to the average month that year.
In terms of market share, Tesco solidified its position as the leading supermarket in Britain with a 27.7% share, following a 4.6% rise in sales over the three months to 9 June compared to the previous year. While most major supermarkets experienced increased sales during this period, Asda and Co-op encountered declines of 4% and 2.3% respectively. Ocado emerged as the fastest-growing grocer for the fourth consecutive month, with a notable 10.7% increase in sales over the 12 weeks to 9 June. Additionally, almost a quarter of British households did their grocery shopping online in the last three months, with over 4% opting for Ocado. Discounter Aldi also increased its sales by 0.8%, securing a market share of 10%.
Despite easing inflation, financial pressures and external factors like weather continue to affect consumer spending behaviour in the UK.
