UK supermarkets are projected to break the £13 billion sales barrier for the first time in December, demonstrating a consumer shift towards premium products amidst festive preparations.
- A 2.5% rise in take-home sales was recorded in the lead-up to December, driven by early festive shopping and increased demand for premium own-label goods.
- Fraser McKevitt highlights a significant spike in the sales of festive treats, with popular items like sweet biscuits and Christmas pudding seeing substantial consumer interest.
- Despite a 6.5% hike in Christmas dinner costs, grocery inflation remains, stable as retailers focus on price cuts, enhancing spending through loyalty benefits.
- Market shifts are evident with Tesco and Sainsbury’s gaining market share, whilst discount chains and online retailers like Lidl and Ocado continue their upward trajectory.
For the first time, UK supermarket sales are expected to exceed £13 billion in December. This unprecedented milestone, revealed in recent Kantar data, is driven by a marked increase in premium product sales as consumers prepare for the holiday season. The rise in spending is attributed to a 2.5% growth in take-home sales for the four weeks leading up to December, indicating that festive shopping is well underway.
A noteworthy trend is the escalating demand for premium own-label products, with spending on these items reaching 5% and likely to climb to nearly 7% by the end of the month. Fraser McKevitt, Kantar’s head of retail and consumer insight, remarks on the ascent of specific festive products, noting, ‘Monday 23rd December is likely to be the single busiest day in supermarkets this year, although shoppers are already preparing for Christmas.’ The sales of sweet biscuits and cheese biscuits doubled in November, and 8% of shoppers have already purchased Christmas puddings.
Sales projections for non-grocery items also show a vigorous upswing as part of the festive splurge, with December 2023 seeing a 21% increase compared to the year’s monthly average. However, the financial demands of the festive season are also evident, with the cost of a Christmas dinner for a family of four now standing at £32.57, up by 6.5% from the previous year. Nevertheless, grocery price inflation maintains a stable rate at 2.6%, largely due to supermarkets prioritising price reductions accessed via loyalty cards over multibuy offers. This strategic pricing approach has spurred a 14% increase in spending on price-reduced items, valued at £355 million more than last year.
Major retailers are seeing shifts in market dynamics, with Tesco’s market share climbing to 28.1%, the highest since December 2017, accompanying a 5.2% rise in sales over the 12-week period ending on the first of December. Sainsbury’s has also experienced growth, expanding its market share to 15.9%, with a 4.7% increase in sales. Combined, these two retailers now dominantly hold 44% of the UK supermarket sector. In tandem, discount chains and online platforms remain resilient, with Lidl reporting a 6.6% boost in sales, while Ocado has outpaced online sales trends with an 8.7% growth, achieving a 1.8% market share. In contrast, Asda’s sales have fallen by 3.5% year-on-year, reflecting its ongoing struggle to capture market share amidst competitive pressures.
These developments underscore a dynamic and evolving landscape in the UK’s retail grocery sector, shaped by consumer preferences and strategic retailer initiatives.
