Inflation dragging down UK grocery, seafood sales
Rising inflation is having an impact on grocery sales in the United Kingdom, which dropped 6.3 percent in the first quarter of 2022, according to new data. Fresh seafood sales are also falling due to higher prices.
Grocery inflation reached 4.2 percent for the 12-week period ending 20 March, its highest level since April 2012, Kantar said in a press release.
“What we’re really starting to see is the switch from the pandemic being the dominant factor driving our shopping behavior towards the growing impact of inflation, as the cost of living becomes the bigger issue on consumers’ minds,” Kantar Head of Retail and Consumer Insight Fraser McKevitt said. “It’s no surprise that sales are down over the latest period as consumers are now more confident eating out of the home again. As well as enjoying meals out with friends and families, people will have also been grabbing food and drink on the go from supermarkets while traveling or at work.”
Inflation also pushed down chilled seafood sales in January, according to Kantar. Overall chilled fish sales fell 1.2 percent to GBP 523.6 million (USD 688 million, EUR 619 million) in Q1 2022 compared to the same quarter in 2021, but were still up 14.7 percent compared to the same quarter two years ago.
Sales of battered fish plummeted 13.4 percent year-over-year the quarter. Sales of breaded seafood fell 7 percent, natural items declined 7.5 percent, and shellfish sales fell 5.8 percent. While chilled fish sales declined 1.2 percent year-over-year, it continued to be “the big winner among the major proteins,” according to Kantar.
“A strong performance by added-value chilled fish, which rose 13 percent, helped support the overall market,” Kantar said in its quarterly report.
Sales of cocktail prawns, the “biggest area of added-value fish and a Christmas favorite,” jumped 38 percent in January, despite an 8 percent price-hike, according to Kantar.
Inflation has also impacted grocery shopping trips in the U.K. The first quarter of 2022 marked the first annual decline in grocery shopping trips in the past 12 months. Households made 15.4 visits to the supermarket on average last month, compared with 15.6 trips in March 2021.
“We’re socializing and commuting more than at any other point since the pandemic began, so consumers don’t have as much time to go to the shops. They also simply don’t need to buy as much food and drink to have at home,” McKevitt said.
Higher fuel prices could be playing a role as well, “as people try to save petrol by visiting the supermarkets less often – something for us to keep a close eye on over the coming weeks,” McKevitt said.
Suppliers and retailers should expect to see consumers take action to manage the growing cost of grocery baskets. Consumers are increasingly turning to own-label products. Own-label sales are down in line with the wider market, but the proportion of spending on them versus brands has grown to 50.6 percent, up from 49.9 percent this time last year, according to McKevitt.
Grocers are also adapting their pricing strategies in response to the rising cost of goods, he said.
“One trend we’re already tracking is the move away from selling products at ‘round pound’ prices,” McKevitt said. The percentage of packs sold at either GBP 1.00 (USD 1.31, EUR 1.18), GBP 2.00 (USD 2.63, EUR 2.37), GBP 3.00 (USD 3.94, EUR 3.55) has dropped from 18.2 percent last year to 15.9 percent this March, he noted.
Shoppers are obviously looking to save money, as discounters Aldi and Lidl led all other grocers in boosting their sales 3.6 percent over the quarter versus last year.
“This rise in sales pushed Aldi to a new record-high market share of 8.6 percent,” Kantar said. "It was especially successful in attracting back older customers this month, with a 16 percent increase in people aged over 55 buying from the grocer. These shoppers had been the most likely to shrink their repertoire of stores during the pandemic, but are now shopping around again.”
The only other retailer performing ahead of the market is Tesco, taking a 27.4 percent share of the market, up from 27.1 percent during the same quarter last year.
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