UK grocery market remains resilient

Watkins: healthy January figures

Trading at UK grocers has remained buoyant in the first two months of 2009, according to the latest data from TNS Worldpanel and Nielsen.

TNS figures for the 12 weeks ending 22 February 2009 show sales grew by 6.4% at grocery multiples, continuing January's strong growth rate.

Reporting Scantrack figures for the four weeks ending 24 January 2009, Nielsen said sales at grocery multiples were up 6.5% year-on-year.

However, TNS added there were still clear signs of trading down to lower price points either within retailer or between retailers.

In the latest period, Asda's low-price positioning is paying dividends, said TNS. It recorded the highest year-on-year growth rate of the UK's top four retailers with sales up by 8.8% giving Asda a record 17.3% share for a 12-week period.

Morrisons also continued its strong run with sales up by 8.2% to give a market share of 11.8%.

Tesco's share remains under pressure, however, as increased sales of its Value range and discount brands contribute to price deflation.

The discounters - Aldi, Lid and Netto - continue to shine in recession and now command a combined 6% market share. Frozen food retailers are strong performers too.

Nielsen data shows Marks & Spencer enjoyed a better January this year than last.

Marks & Spencer: better January 2009 than 2008

Mike Watkins, senior manager retailer services at Nielsen, said: “The January figures look healthier than we have seen for months with Morrisons and Asda turning in notable performances and Marks & Spencer and Waitrose re-entering growth, particularly in the last four weeks where M&S sales grew by a respectable 6% and Waitrose saw 4% uplifts versus last January.”

Watkins said M&S had been lifted by tactics including the extension of a ‘dine in for two’ offer and a £5 off a £25 basket voucher scheme. The retailer had also cut prices on products across the store.

As a result, Watkins said the number of visits per shopper were up 12% year-on-year. It also benefited from January sale shoppers buying food in store when looking for non-food bargains.

Of the top four retailers, Asda had the best January with sales growth of 10% in the four weeks to 24 January, said Nielsen.

The Wal-Mart-owned retailer was also boosted by sales of general merchandise including electricals, homeware and clothing. In the four-week period the average spends per Asda shopper rose by 6%.

Watkins again: “Non-foods have struggled in supermarkets for months – it was one of the first categories to suffer as the downturn bit with shoppers cutting back on discretionary spending.

“Average growth in 2008 stood at just over 2%. In January, sales in this category grew 4.4% and if we work back in the VAT cut this would be around 6.5%.”

Performances over the next couple of months will signal if this upturn is deferred December spend, cautioned Watkins, or whether ‘green shoots’ are sprouting.