TOP NEWS: UK grocery sales slip as online decline hits Ocado

(Alliance News) - UK supermarket sales remained above pre-virus levels despite a decline in recent months, data from Kantar showed on Tuesday, noting a slight slip in online grocery buying as some old shopping habits return.

In the 12 weeks ended August 8, grocery sales fell by 4.0% year-on-year to GBP29.55 billion from GBP30.77 billion. Sales were 9.9% higher than they were in 2019, before the onset of the virus outbreak.

A slowdown in online sales meant Ocado Group PLC's sales declined for the first time on record. Most major grocers saw sales fall, though Tesco PLC, J Sainsbury PLC and German discount chains Aldi and Lidl gained market.

Kantar noted shoppers have been "steadily returning to pre-pandemic" habits, making less sizeable but more frequent trips to supermarkets. What has endured, however, is a shift away from cash. In the 12 weeks to late June, shoppers made 87% of all payments using a card, Kantar noted.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: "In the past month grocery sales were just 0.5% lower than this time last year, the best four week ending market performance since April. In monetary terms at least, we seem to be in a similar place to 12 months ago, but if we dig deeper into the data we can see that our shopping habits are actually very different."

"With the end of social distancing restrictions people have been happier to head into stores to make more regular, smaller shops. Consumers made an extra 108,000 shopping trips this month, while average basket sizes were 10% smaller."

Supermarket prices slipped 0.8% in the 12 weeks ended August 8, Kantar said. However, in the past four weeks, grocery inflation stood at 0.4%. At this rate, GBP19 will be added to the average annual grocery bill in the UK.

"It’s expected that inflation will rise again in the coming months, and as a result we'll likely see shoppers seeking to tighten the purse strings and save where they can," McKevitt added.

Online sales have taken a hit recently, McKevitt noted. Just over 20% of the population bought groceries online during the 12-week period, the lowest proportion of digital supermarket shoppers since October 2020. The share of online sales now stands at 13%, down from February's peak of 15.4%.

Ocado's sales slipped as a result of reduced online sales. In the 12-week period, the Hatfield, England-based firm's sales were 0.7% lower annually at GBP538 million from GBP542 million. Nevertheless, Kantar's McKevitt said Ocado's outlook is "positive". The company clung onto its 1.8% market share during the period, with sales 44% above the same period two years prior.

The traditional 'big four' grocers, Tesco, Sainsbury's, Wm Morrison Supermarkets PLC and Asda all posted sales drops.

Tesco sales were 1.8% lower at GBP8.03 billion from GBP8.18 billion. Its share of the UK grocery market rose to 27.2% from 26.6% regardless.

Sainsbury's saw its sales decline 2.6% to GBP4.48 billion from GBP4.60 billion, though like Tesco, it posted an improvement in market share, rising to 15.2% from 14.9%.

Morrisons, recently the object of a takeover tilt, posted a 6.2% sales fall to GBP2.95 billion from GBP3.14 billion. Its market share fell to 10.0% from 10.2%.

At Asda, sales were down 4.7% to GBP4.20 billion from GBP4.40 billion, whilst its market share slipped to 14.2% from 14.3%.

German discount chains gained market share. Lidl's market share improved to 6.1% from 5.9%, while Aldi's was up to 8.2% from 7.9%. Lidl's sales fell 2.1% annually during the 12 weeks, while Aldi's faded by 1.3%.

Co-op sales tumbled 11%, with its market share falling to 6.6% from 7.1%. Meanwhile, Iceland sales fell 8.7% with its market share slipping to 2.3% from 2.4%.

The only major UK grocery chain to actually post improved sales was John Lewis Partnership's Waitrose arm. Waitrose sales rose 0.6%, with its share of the market improving to 4.9% from 4.7%.

Outside of the major and more ubiquitous players, there are has still been notable movement, Kantar analyst McKevitt added, with Amazon.com Inc adding to its grocery offering in the UK.

"Amazon announced this week that it will be adding its own branded groceries to its UK website, supplementing its existing tie up with Morrisons. This could bring its offer more in line with what we know about British shopping habits. The British public is among the most reliant in the world on retailer own label brands. Currently, 11% of Amazon's grocery sales are own label lines, well below the 50% market average," McKevitt explained.

By Eric Cunha; ericcunha@alliancenews.com

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