Convenience stores growing faster than overall grocery market in the UK

Figures from data analyst NielsenIQ released yesterday (31 May) found UK grocery sales grew by 0.6% over the past four weeks, the first positive growth since Christmas. Visits to stores were up by 7%.

The convenience channel outperformed supermarkets, with 3.7% growth in sales in the last four weeks, now accounting for 24% of all FMCG sales.

The online share of grocery sales remained stable.

Nielsen said that with household budgets squeezed, consumers are shopping around for the best prices.

This is behind the 7% increase in store visits, which is driving sales growth in bricks-and-mortar sales, up by 2%.

The overall growth in sales was also helped by a 2.3% increase in the week ending 21 May, as shoppers prepared for the school holidays and the long bank holiday Jubilee weekend, with 20% of households expected to buy extra groceries for the Jubilee weekend.

In terms of categories, there was a strong increase in sales of pet care products (up 11.9%), soft drinks (11.2%), and health, beauty and baby care products (10.4%).

The categories seeing the biggest declines were beers, wines and spirits (down by 12.1% due to Covid-19 comparatives), as well as meat, fish and poultry (down 4.7%).

Despite the overall increase, volume sales at the grocery multiples fell by 6%, which NielsenIQ said reflected the squeeze on household budgets.

It said the 3.7% increase in convenience stores highlighted the change in consumer behaviour, as consumers spend more on-the-go, at work or socialising and began reverting to shopping “little and more often”.

Promotional spend fell from 21.5% of value sales last month to 20.4%, similar to this time last year (20.6%), “suggesting there is little appetite from retailers to use volume-based promotions to drive sales when shoppers are looking to spend less on each shopping trip”.

Mike Watkins, NielsenIQ’s UK head of retailer and business insight, said: “The forthcoming platinum jubilee bank holiday weekend should give a welcome if short-term boost to grocery sales.

“While many shoppers may have been pre-buying items such as drinks and party decorations, the forecasted warm and sunny weather will provide a good trade-up opportunity for fresh foods, with al fresco dining top-of-mind for shoppers.

“While this helps superstores, with their breadth of range, convenience stores are also likely to benefit from impulse purchasing as they always do when the sun shines.”

Watkins added: “Shoppers are becoming more considered in what they buy and the current challenge for supermarkets is to improve volume growth by getting more items into the shopping basket.

“The upside for supermarkets is that shoppers may be more inclined to dine in at home as budgets get squeezed.”

Source: Talking Retail