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Senior Retail Analyst Nick Gladding looks at how Christmas played out for the grocery sector and the key challenges facing our industry in 2019.

Nick Gladding

Nick Gladding

Senior Retail Analyst

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The UK's second largest grocer has reported slight declines in like-for-like and total retail sales in its third quarter trading statement, which it attributed to less involvement in Black Friday activity and trading down by shoppers.

Lower inflation impacts growth

In the 15 weeks to January 5th, like-for-like sales fell by 1.1%, ending eight quarters of positive figures. The result compares with +1.1% for the same quarter a year ago. Total retail sales also declined by 0.4%.

Solid grocery sales

Grocery sales increased by 0.4%, reflecting strong service and availability and an improved pricing position relative to competitors. Volume performance was broadly similar to H1 in a slower market and most of the change in headline growth was a reflection of lower inflation. This fell to its lowest rate for two years, with Sainsbury's also running fewer promotions than a year ago. Sainsbury's noted a slight trading down by customers which impacted average selling prices though grocery volume growth improved over the period particularly in core grocery categories. New lines proved popular, particularly vegan and Free From products, however Taste the Difference sales grew more slowly than in previous quarters. Online grocery grew by 6% and convenience by 3%, only slightly slower than in H1.

General merchandise declines by 2.3%

Argos performed well in the key Christmas weeks but sales declined earlier in the quarter due to less involvement in Black Friday as Sainsbury's chose not to run unprofitable promotions and underlying demand was weak. Argos was also impacted by an unexpected double digit decline in the toys market one of its most important categories. Argos stores in Sainsbury's performed well: the 138 stores in their second year of trading delivered an average sales increase of over 10%. Margins however were reduced by the mix impact of growth in lower margin categories such as consumer electronics. 

Clothing growth was slightly negative at 0.2% but ahead of the market with double digit growth in full price sales.

NEW STORE VISIT REPORT: See inside Sainsbury's new Selly Oak store - Retail Analysis subscribers only

 

Christmas results coverage from IGD 

Christmas results tracker - See the story of Christmas emerge through tracker, updated on every results day

Christmas 2018 and new year outlook - Our report summarising retailer performance and key trends will be released on January 16th

Christmas 2018 and new year outlook - Senior Retail Analyst Nick Gladding's video briefing of Christmas performance and trends will be available on January 23rd

Britain's grocery market grew more slowly over the Christmas period as inflation softened and more people shopped at discounters, according to new data from Kantar Worldpanel.

Lower inflation impacts growth

In the 12 weeks to December 30th, market growth was 1.6%, down from 2.0% in the 12 weeks to October 7th and from 3.8% for the same period a year ago, pulled down by lower inflation. Inflation for the period was +1.3%, less than half the 3.6% rate of Christmas 2017 following investments in price by retailers to meet consumers' heightened focus on value. Despite this shoppers spent a record £29.3bn on groceries, £450m than a year ago.

Premium ranges drive growth for discounters

Once again Aldi and Lidl set the pace for the sector, with two thirds of households shopping at one or both of the discounters over the 12 week period. Aldi's growth of 10.4% is in line with the 10% growth it reported yesterday with strong sales of vegetables following the popular Kevin the Carrot marketing. At Lidl, nearly one third of December's growth came from sales of branded lines and sales of the Deluxe range jumped by one third. Together the two discounters secured a 12.8% Christmas market share, their highest ever.

Asda and Tesco strongest of Big Four

Asda narrowly beat Tesco to be the fastest growing retailer of The Big Four. Its Extra Special range was the fastest growing premium range of any major retailer.  Asda also performed strongly online with growth of 12%. Tesco meanwhile achieved growth of 0.6%, lifted by an extra 125,000 shoppers visiting its stores, particularly its larger formats. Interestingly, Kantar reports that Tesco was the only retailer to have increased its promotional activity year-on year, with its 29p festive veg packs securing its position as a destination for main Christmas meal shoppers. Tesco will report its Christmas results on Thursday Jan 10th.

Flat results for Morrisons and a decline for Tesco

Morrisons sales were essentially flat for the period though this result excludes sales through the retailer's fast growing wholesale operations. See Morrisons own results for the factors shaping its trading performance. At Sainsbury's, sales declined by 0.4% according to Kantar. The retailer will release its own results tomorrow.

Encouraging growth for Co-op

Co-op has continued its strong run of recent results, achieving 3.2% growth over Christmas. Its market share increased for the seventh consecutive period and is likely to advance further in 2019 as it pushes ahead with 100 new store openings.

 

12 weeks to 31 Dec 2017 (% share)

12 weeks to 30 Dec 2018 (% share)

Sales growth (Y-o-Y %)

Tesco 28.1 27.8 0.6
Sainsbury's 16.5 16.2 -0.4
Asda 15.3 15.2 0.7
Morrisons 10.8 10.6 0.1
Aldi 6.8 7.4 10.4
Co-op 5.8 5.9 3.2
Lidl 5.0 5.4 9.4
Waitrose & Partners 5.2 5.0 -1.7
Iceland 2.2 2.3 1.8
Ocado 1.1 1.0 1.3
Other multiples 1.6 1.7 7.3
Total symbols & independents 1.7 1.5 -6.2
       

Source: Kantar Worldpanel

Christmas results coverage from IGD

Christmas results tracker - See the story of Christmas emerge through tracker, updated on every results day

Christmas 2018 and new year outlook - Our report summarising retailer performance and key trends will be released on January 16th

Christmas 2018 and new year outlook - Senior Retail Analyst Nick Gladding's video briefing of Christmas performance and trends will be available on January 23rd

Presentations

04/02/2019
An essential summary of trading priorities, latest developments, and other key commercial insights for Sainsbury's.
29/01/2019
In our latest London city guide we share inspirational formats from three of the UK capital's food-to-go hot spots.
29/01/2019
We showcase in-store health and beauty developments from three leading UK retailers.
15/01/2019
We compare the festive strategies and trading performances of the UK’s leading grocers. Hear Nick presenting the results here.
View all presentations

Key presentations

As its plans for a merger with Asda face regulatory scrutiny, we explore Sainsbury’s interim results and its current strategic priorities.

This in-depth guide to the United Kingdom explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

An essential summary of trading priorities, latest developments, and other key commercial insights for Sainsbury's.

27 June, London
Hear from Group CEO, Mike Coupe and the Sainsbury's and Sainsbury's Argos leadership teams, who will provide a business and commercial update on ‘Destination Sainsbury’s’.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

If you have a specific business challenge or training requirement we can put together something just for you.

We've grouped all the latest European retail news, store visits, retailer profiles and downloadable presentations together in one place.