Retail sales remain high

[24 September] Bricks and mortar retailers, including Lidl, may have missed out on trade during the height of the pandemic when online grocery providers were inundated with orders, however there is talk of price-wars between supermarkets as they vie for loyalty. Sales continued to remain high, growing year on year by 10.4% across the grocery market.

In Northern Ireland, Tesco remains the biggest grocery retailer, with Kantar reporting its share as 35.4% in the 52 weeks to 6th September. Lidl has the smallest share at 6.4% in NI, however it had the highest boost in sales value of all the retailers here, up 11.1%.

Emer Healy, retail analyst at Kantar said: “Sales at Asda were up by 3.1% and at Sainsbury’s by 7.6%. Sainsbury’s was the only retailer to see an increase in shopper frequency over the latest 52 weeks, which grew by 4.8%. Asda customers meanwhile made the biggest additions to their weekly food shop and volume sales were up by 19.2%.

“Tesco, which holds the biggest share of the market, increased its sales by 9.2% year on year, adding 0.4 percentage points to its market share. It was also the only retailer to recruit new shoppers in the past year, which contributed an additional £12.7m to its overall growth. People buying more in store, up 12.2%, and average prices growing by 2.8% both contributed to its success.”

Back to school boosts spending

With schools returning in September, supermarkets have seen an increase in spending on lunchbox items, with popcorn sales up 58%, cheese up 8.4% and butter increased by 11.9%. Additionally, food wraps like clingfilm and tinfoil grew by 19.8%.

Price will determine loyalty

Across the UK, the four main supermarkets have increased their online shopping capacity, doubling online sales’ share of the market to 13%. Just today, The Grocer reports that demand for online shopping slots have again increased. To compete with this, Aldi has started offering click-and-collect services, and a partnership with Deliveroo, while Marks and Spencer have joined Ocado. Lidl remains without any online offering, however the discounter is planning to entice more customers with new stores. Across the UK, the retailer plans to open 50 new stores each year, with plans for a new outlet on the Crumlin Road in Belfast underway.

Rival supermarkets are aware that price will play a key factor in determining loyalty in coming months, and many are already price matching. Tesco stores are price matching with Aldi on everyday products (even in NI where Aldi doesn’t operate), Asda is expected to reduce prices and Spar/Eurospar match prices in Tesco. The Financial Times estimates the price gap between discount stores and conventional supermarkets has reduced from 20% to between 10-12%.

In Northern Ireland, symbol retailers Musgrave and Henderson also have had strong performance. Offering supermarket levels of value at community levels has given the retailers an increase in value sales of 16.6% over the year. They also took a bigger slice of the market with supermarket share increasing by 0.6% points to 8.6%.

Buying limits reintroduced

After the wave of panic buying in March, supermarkets are planning better for potential stock shortages, with Morrisons implementing purchase limits on household items including toilet rolls and disinfectant. The Grocer reports Tesco has followed, putting limits on popular bulk-buy items including flour, dried pasta and babywipes. Demand for some items has increased, with sales of pasta up more than 20% week on week. Tesco boss Dave Lewis has stressed to customers that there is good availability for items and stockpiling should be avoided, ensuring widespread demand can be better managed.

Tactical campaigns will win consumers

Key to attracting consumers will be highly visible, tactical advertising campaigns. Safety messages are still important, reassuring the public and informing about opening protocols, but when a price war takes hold, bold statements focused on price will help win the battle.