Fickle consumers pile on pain for UK multiples

09 February, 2016

UK consumers are losing their retail loyalty and are increasingly willing to shop at a wider range of stores if it means saving money, the latest retail figures from market analysts Nielsen suggest.

Sales volumes for the four weeks ending January 30, 2016 fell back 0.8% year on year, the sharpest contraction in some 15 months.

Sales were down 0.6% by value.

Volumes at the UK’s leading multiples declined for the fifth month in a row.

The leading discount retailers, by way of contrast, continued to pile on the growth.

Aldi is growing at 18.7% year on year and Lidl at 17.2%. The two retailers’ combined market share is now 11%.

They were at 9.4% a year ago and only broke through the 10% barrier in November, strongly suggesting that their pace of growth is increasing.

Asda continues to suffer most from the discounters’ onslaught, falling back 4.4%, while Sainsbury’s remains the strongest of the big four, albeit with tepid 0.2% growth year on year.

Mike Watkins, head of retailer and consumer insight at Nielsen, said: “Half of consumers are changing their spending habits to save money, including chasing price cuts around different stores.

“This promiscuity is characterised by consumers shopping more often at more places while buying less, and that’s hurting supermarket performance.

“Asda, in particular, is being impacted by this disloyalty as low prices are no longer a clear differentiator when so many supermarkets price match.

“Sainsbury’s are the top four’s best performer and are successfully attracting new shoppers without being as reliant on promotions as last year or compared to other retailers.

“In contrast, promotional activity increased at Waitrose in the last four weeks at the same time as sales slowed. Across the market, the proportion of sales purchased on promotion fell again to under 31%.”

Sales growth at Waitrose slowed to a barely perceptible 0.1% for the four-week period.

There was some relief for the multiples in that most grocery retailers attracted new shoppers in January, Watkins said.

But, he added, “In reality these will be less valuable shoppers, spending less per visit than regular, loyal, shoppers.

“The challenge is how individual retailers can differentiate themselves to get people to return again in February and spend more.

“The supermarkets need to up their game in this regard, as Aldi and Lidl have certainly been the most effective at doing this over the last two years.”

Connor Campbell, a senior market analyst at www.spreadex.com, said: “In the latest twist in the ongoing supermarket price war, it appears that many of the bigger names (especially Asda) are losing out due to changing trends in the way in which people shop.

“Where once brand loyalty to a specific supermarket was common place, with little deviation from that store beyond a pop out for a few essentials, now people are flitting from one to another, buying less at each in the process, all in order to save money.

“It’s the kind of the behaviour that will likely push Tesco, Sainsbury’s et al to try to find more and more ways to differentiate themselves from one another – perpetually cheaper prices being one option – to try to secure a regular ‘big shop’ from customers.”




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