Major supermarkets and research companies have now reported
Christmas trading results.
We have learned that food deflation continues, and that,
according to research agency Kantar World panel, groceries overall were 1.8%
cheaper than in 2014, with the cost of Christmas dinner dropping by 2.2%.
Nielsen, another research company reported that sales of meat fish and poultry
were down by 3.8%.
Nielsen also reported that in the 4 weeks before Christmas,
the proportion of sales bought on promotion dropped to 31%, the lowest for over
5 years.
Online grocery shopping grew over Christmas but not by much.
Tesco reported sales growth of 5%, and Sainsbury !0%. Once again the numbers
suggest that some forecasts of a doubling of online grocery sales by 2020 seem
optimistic.
Seeing the wood for the trees when it comes to how well
supermarkets did over Christmas can be tricky, and headlines can be misleading.
The main cause of confusion is the difference between total
sales and “like for like” sales which strip out the impact of new store
openings and closings, with the picture being further muddied by the different
time periods each company chose to report on.
Kantar World panel for example quotes data for the 12 weeks
to 3rd January, and tells us that “Waitrose, the Coop and Sainsbury
were the Christmas winners”. Yet, according to Waitrose’s own results, like for like sales over Christmas were down
1.4%. Sainsbury did not disclose its Christmas trading, but stated that
quarterly like for like sales were down 0.4%
By contrast, Morrisons like for like sales over Christmas
were up by 0.2% which sounds miniscule but was celebrated for being the only
sign of growth in the past 4 years. And Tesco’s like for like grew by 1.3% in
the 9 weeks to January 9th. Both recorded declines for the quarter
due to store closings.
Aldi and Lidl grew by 13% and 18% respectively in the
quarter, but according to some reports,
Aldi’s like for like sales were only up around 1% in the run up to Christmas.
If correct this seems to confirm that discounter growth will come from opening
new stores rather than increasing business through the shops that they already
have.
ASDA has not reported results but its recent promise to
spend another £500million on reducing prices would seem to indicate that they
are losing the competitive battle.
Consumers were the winners at Christmas, but they were restrained
in their purchasing, and unlikely to loosen their grip on the purse strings any
time soon. Supermarkets and those who supply them faced tough trading
conditions, and the onward march of the discounters as they open new stores
combined with a desperate search for market share by traditional supermarket operators mean no let up in competitive
pressure. The one bright spot is that
less product was sold on promotion, but any savings will probably need to be
ploughed back into every day price reductions.
