Analysts have a bleak outlook for grocery sales in the U.K. this Christmas season as inflation remains high, but seafood analysts remain optimistic for the category as the holidays near.
Christmas season food sales are expected to incline 2.5 percent in the U.K. but decline 0.7 percent when adjusted for inflation, according to global consulting firm AlixPartners.
AlixPartners also found 21 percent of British consumers intend to spend less on food this Christmas compared to last year, while only 13 percent plan to spend more. A little more than half of consumers (55 percent) plan to spend the same amount as last year.
Similarly, only 9 percent of Britons plan to spend more this Christmas – on all shopping – than last year, while 45 percent intend to spend the same and 22 percent plan to cut back, according to the firm.
“With the legacy of inflation continuing to bite and consumer confidence holding back spending, this Christmas is set to be a subdued affair for grocers,” AlixPartners Head of Europe, the Middle East, and Africa Retail Matt Clark said in a statement. “Last month’s budget brought difficult news, with many preparing to take a significant financial hit as a result of the National Living Wage and National Insurance Contribution increases.”
Jennifer Robson, the head of economics, insight, and advice at U.K. seafood representative body Seafish, told SeafoodSource that sales have been slow in November in the lead up to Christmas but may pick up as the holiday approaches.
“Shoppers are buying slightly less per shopping occasion than the same period a year ago, but [the industry is] anticipating higher spending over the next few weeks,” she said.
Referencing historical trends, Robson said customers may wait to purchase chilled fish and shellfish a few days before Christmas, but “savvy shoppers” may stock up on frozen fish and shellfish early on promotion as expiration dates will extend beyond Christmas.
To that end, Kantar Head of Retail and Consumer Insight Fraser McKevitt said that while some believe Christmas promotions occur too hastily, “it’s clearly important for retailers to set out their stalls early” for customers looking to get ahead of the shopping rush in late December.
Based on the past three Christmas shopping seasons, in which seafood sales grew every year, overall seafood sales are likely to hike up again in 2024, Robson said.
In 2023, seafood sales by value rose 5 percent to GBP 133.4 million (USD 169.1 million, EUR 160 million) during the Christmas season, while sales by volume inclined 2.3 percent, according to Seafish, which referenced Nielsen data. Chilled seafood sales by volume surged 39 percent last Christmas season, frozen seafood sales soared 18 percent, and ambient seafood rose 6 percent.
During Christmas week, overall seafood sales by value surged 51 percent, and sales by volume grew 25 percent. Lobster had the highest sales by volume growth, rising 145 percent compared to the week before it, followed by scallops with a 115 percent incline, and coldwater prawns, which hiked up 109 percent.
“In general in 2024, the cheaper species, particularly in the frozen category, have been favored over the higher-priced species such as lobster,” Robson said but added that Christmas and other holiday seasons lead to hikes of more premium species.
Though some are willing to spend on higher-end species as the holidays near, AlixPartners said value retailers have an opportunity to secure market share this holiday season.
“The increase in the National Living Wage presents a window of opportunity, particularly for those retailers serving lower-income consumers, to capture a greater share of wallets before further price increases take hold,” the firm said. “Retailers positioned to capitalize on this window quickly may see share growth during the festive period.”
Aldi is one such retailer that has enjoyed greater market share amid rising inflation and had goals to open 500 new stores across the U.K. in 2024 and create 5,500 new jobs along with those store openings.
“Our popularity is growing, and there is a huge demand for people to have an Aldi store near them to increase [their] access to our unbeatable prices,” Aldi U.K. and Ireland CEO Giles Hurley said at the time.
