Consumers Buying More Premium Own-Label Ranges Despite Rising Prices; Tesco And Discounters Gain Share

Namnews, 7th December 2021

All the major grocery retailers in the UK saw their sales fall over the 12 weeks to 28 November against tough comparatives with last year when Covid restrictions were reintroduced. The data from Kantar also suggests that rising food prices aren’t impacting people’s desire to treat themselves over the festive period.

Take home grocery sales fell by 3.8% during the period as consumers ate out more compared with 2020. However, sales remain strong compared with the market before the pandemic, and grocery spend was 7.0% higher in the latest 12 weeks than in 2019.

Meanwhile, consumers appeared to be making an early start to their preparations for the Christmas period, hoping to make it extra special after the disruption last year. Fraser McKevitt, head of retail and consumer insight at Kantar, commented: “Price inflation doesn’t seem to be denting their desire to treat themselves and loved ones, and supermarket premium own-label ranges, such as Tesco Finest and Asda Extra Special, are the fastest-growing ranges in store. Last December, we saw sales of premium own-label lines hit more than £587m, and the figure could be even bigger this year.”

Kantar highlighted that inflation is already nudging up the price of Christmas dinner staples, with the average cost of a traditional festive meal for four now 3.4% higher than last year.

Across the board, grocery prices were up 3.2% in the latest four weeks, the highest rate of inflation Kantar has recorded since June 2020. “Consumer behaviour hasn’t caught up with these changes though. Habits we’d expect to see shift, like swapping branded products for own label or seeking out promotions, haven’t altered just yet,” McKevitt said.

Online grocery sales continued to fall, down by 12.5% in the four weeks to late November. However, Kantar suggested that growing concerns over the Omicron Covid-19 variant may result in some people preferring to shop online again to limit their visits to stores.

While all grocery retailers achieved growth compared with pre-pandemic levels in 2019, year-on-year sales were down across the board. Tesco’s sales fell by 1.4%, although this was a softer decline than the total market. The number one grocer won 0.7 percentage points of share this period, its biggest jump over 12 weeks since 2007, taking it to its highest market share since February 2019.

Lidl and Aldi also made share gains after both limited their annual sales decline to only 1.1%. Lidl hit a new record market share of 6.4%, while Aldi won 0.2 percentage points to move to 7.9%.

Sales at Ocado fell by 2.4% but have grown by 35.0% compared with two years ago. It boosted its market share from 1.7% in 2020 to 1.8% in the past 12 weeks.

Sainsbury’s, Asda, and Morrisons all saw declines in their shares, while Waitrose held steady at 4.9%.

Independent and symbol retailers saw the biggest decline, down by 10.5%. However, they remain in growth compared with 2019.

NAM Implications:

• Key issue is growth of premium private label at the expense of equivalent national brands.
• The fact that the quality of premium private label can be equal or even better than national brands at the same price…
• …means better value for money…
• …and probably a permanent shift in allegiance.
• A backdrop of the remorseless growth of online and the discounters…
• …where higher pipeline inflation has not really kicked in yet.
• Means seatbelt tightening a default option for 2022…