Skip to main content

Grocery sales sluggish; local shop outlook uncertain

There are many sources of grocery market data compiled in different ways. Kantar Worldpanel uses till roll receipts from 25,000 households, chosen to reflect the demographic make up of the UK. It also measures the prices of 75,000 products to form a view of grocery inflation.

It publishes numbers every month and the latest figures for the 12 week to 10 July show that the market is picking up - which contrasts with many market views. However, it also says that grocery inflation has risen, from 4.6 per cent to 4.8 per cent. It now says it is likely this will reach 5 per cent this year. A month ago, it was not of this opinion.

The reason for this change of view is that a small number of categories are seeing very high price rises. "This is putting extra pressure on shoppers' budgets," it says. "We expect the market to slow in the coming months."

Kantar Worldpanel points out that Aldi and Lidl are growing and Waitrose is growing. The growth, it says, is coming at the bottom and the top of the market. Its figures for independent retailers tend to underplay real sales from local shops as so many do not hand out receipts with purchases so these are not counted. However, they currently show a rise of 9.7 per cent for the past 12 weeks, which beats both the inflation measure and the grocery market sectors growth of 4.6 per cent.

It may sound encouraging but long term KW figures show that independent shops are flat-lining in the low 2.3 per cent market share. There is not much change in the big four's market shares either.

A second view comes from Nielsen market share data for the eight weeks to July 9. Evolution Securities analyst Dave McCarthy uses this to say that the grocery market is in its worst position in more than 30 years. Falling levels of disposable income allied to increasing levels of investment in new shops mean that trading for the major supermarkets is likely to get tricky, he argues.

In the past, they have always had one weak market participant to pick off. Today, all four major companies are very competitive. Something will have to give, concludes Mr McCarthy, as he advises investors to be cautious.

The outlook for local shops is not necessarily the same. If shoppers are looking to avoid trips to the supermarkets, local shops stand to pick up top up sales. But the outlook will influence suppliers. For example, we may see reduced investment in product innovation by packaged goods companies and an even more cautious approach by banks to funding expansion - or even working capital - for local shops.

One thing local shopkeepers can do is to talk up success, whether it be on your own web pages, with your local suppliers or in the local media. Take a leaf from the Waitrose play-book. Every week it pumps out good news into the market about its innovations and its sales growth. As a privately owned company, it does not have to do this. But it is part of its strategy to create a good news story around itself.

Comments

Popular posts from this blog

Busy street, empty shop, missed profits

True in part to my New Year resolution, I held a business meeting in an independent coffee shop today just next door to a Starbucks. The cafe was presented well and four staff were busy preparing for the lunchtime rush, at 11am. As my guests were late, I had a half hour overview of footfall on the street outside and in the restaurant. Six customers. Barely enough to form the queue in Starbucks or Pret-a-Manger just down the road. Plus one Italian girl who dropped off her CV. Some people stopped to look at the posters in the window and moved on. The owners seemed quite happy. When I left just after 1215, they were doing brisk trade. However, I have the impression that the business is not working hard enough. It could easily have managed 120 customers between 11 and 12, instead of 12. This is lost profit as the fixed overheads and staff costs are already in place. The owners are clearly busy - perhaps too busy to take time to look at the potential that their cafe has. What shou...

Three secrets of great merchandising

Look at the ceiling and top wall of this McDonalds restaurant. There is a picture of two good looking healthy people having fun and some bright primary colours. Ask yourself what is the purpose of this picture? In the latest issue of Retail Newsagent in a feature on merchandising, Andrew Knight of RI tells its independent readers that they need to think about using sharp pictures of non-packaged products linked to people consuming goods. Perhaps this has been taken to the next level by the fast food chain - that is selling the feeling of being happy and healthy rather than the products. A second, related tip from the same feature is made by most contributors - it is vital to keep windows clean and clear of clutter. "I believe that less is more," says Roli Ranger, a retailer from Ascot, Berkshire. He has posters for promotions in between the windows that are regularly updated and discreet signs in the windows. Third, a highly visible well-stocked promotion at the entranc...

Think before you delist your slowest seller

Retailers need to introduce new products to provide their shoppers with "good news" and to generate interest. But for each new product that you introduce you need to consider delisting an existing line. Easy, you might think. I will just print out the list of products in the category and take off the one with the lowest sales. However, if you do this research from the US suggest you might be wrong. What you need to consider is what sort of demand you have for each product, a white paper by Demand Tec, a US specialist software provider shows. It says that there are two kinds of sales: incremental sales, when products add to the total shopper spend and are not readily substituted by another item transferable sales, where shoppers find an alternative easily when it is not available. Using its software, it shows a category with 50 products from top seller to bottom seller. At the same time it also measures the incremental sales each product provides. The number 50 in ove...