Grocery market inflation in the UK has tumbled to 1.6%, the lowest level it has been in nearly three years, according to newly released data from Kantar Worldpanel.
That easing has helped spur on foot traffic to supermarkets. In the past month, consumers have increased their trips to shops by 2% and spent more on just about everything.
While own-label sales have jumped by 2.7%, even more significant have been purchases of branded items, which rose 3.6%. Takeaway items have also risen, thanks in part to Wimbledon and the England national team’s recent foray into the Euro football final.
“England’s hopes might have been dashed on Sunday, but there was still some cause for celebration in the grocery industry,” wrote Fraser McKevitt, head of retail and consumer insight at Kantar, noting that snacking items were among the most popular in stores, along with beer.
With the two big events now in the rearview mirror, the spotlight is back on politics and what policies might develop that impact the grocery sector under newly minted Prime Minister Keir Starmer.
“The retail landscape looks very different from 2010 when the last Labour government was in power – and so do our shopping trolleys,” McKevitt wrote.
It is safe to say that lower inflation will help, at least in the short term. And supermarkets should enjoy the ripple effect as summer sets in.
Retail outlook
Over the past year, Ocado has seen sales leap by more than 10% as shoppers embrace the convenience of online shopping. While Ocado still holds only a 1.8% market share, its growth is notable and a positive sign for those who do big business in physical stores and have leaned into omnichannel strategies.
Another driver of foot traffic and sales has been discounting. Supermarkets remain committed to offer low prices on staple items such as fruits and vegetables even as inflation has eased and incomes have risen slightly. Shoppers across the UK are still contending with high costs for other items, such as energy.
So many continue to shop at Aldi, which holds a 10% market share in a comfortable fourth position, and at rival Lidl. Sales at Aldi rose 7.8% in the past 12 weeks and its increased footprint has helped it achieved an 8.1% share and sixth spot in the UK market. Tesco remains at the top at 27.7%, followed by Sainsbury’s (15.3%) – which saw sales jump by 4.7% – and Asda (12.7%). Morrisons, trying to hold off a surging Lidl, is at 8.7%. Co-op sits at 5.7%, while Iceland is at 2.3%.
