Consumers still feeling the pinch but willing to indulge in festive perks
Grocery price inflation held steady throughout November, at 4.7%, while take-home sales have risen below inflation by 3.4% over the four weeks to 30th November, latest figures show.
Retailers are ramping up investment in promotions to encourage shoppers through their doors as the march to Christmas is well underway, with sales expected to exceed £13.6 billion in December.
The latest data from Worldpanel by Numerator shows 31.2% of spending as on promoted items, up from 30% this time last year, with retailers pulling out all the stops to win shoppers over as they gear up for one of the most important trading periods of the year.
Fraser McKevitt, head of retail and consumer insight at Worldpanel said cost was still a major factor in the decisions behind spending for consumers.
“One in five households tell us that they’ve been struggling financially and that’s been largely consistent over the past two years,” said Fraser.
“With the cost of living still biting for many this Christmas, just under one third of all spending is on promotion as supermarkets find ways to shield shoppers from the impact of price rises.”
The emphasis on offers and lower pricing means that the cost of a Christmas dinner for four is a few pence cheaper than last year, at £32.46. However, retailers know that as well as keeping an eye on budgets, consumers also want to indulge during the festive season.
“Retailers are savvy to the fact that at Christmas especially – even when times are tough – consumers still find the space in their wallet to spend on small treats,” said Fraser.
“In fact, we’ve seen that right through the cost of living crisis as people have found new, more affordable ways to indulge in what we call the ‘pick-me-up pound’. The rise and rise of premium own label lines bears this out with one in every £20 now spent on these treat-type products.”
Chocolate prices are up 18.4% on this time last year, but that hasn’t stopped five million households putting a confectionery advent calendar in their basket in November. Similarly, just over one in 10 shoppers fancied a festive tipple and bought a bottle of champagne or sparkling wine over the last month.
Meanwhile, online remains the fastest growing part of the market, with sales up by 8% in November to hit the second highest ever sales in a month since the pandemic high of February 2021. However, bricks and mortar still dominate the grocery sector, and with Christmas falling on a Thursday this year, Monday 22nd and Tuesday 23rd are expected to be the busiest shopping days of the year.
Within the retailers, driven by its ninth consecutive month of double-digit sales growth at 10.2%, Lidl made the biggest market share gain, winning an additional 0.5 percentage points compared with last year to reach 8.1%.
Sales at Sainsbury’s rose by 5.1%, bringing its market share to 16.0%. Tesco grew sales by 4.7%, as it attracted 321,000 more shoppers over the 12 weeks versus last year. Britain’s largest grocer now holds 28.3% of the market.
Elsewhere, Iceland grew ahead of the market at 4.0%, maintain shares of 2.3%, while Asda now accounts for 11.5% of the market and Co-op’s share stands at 5.3%. Beyond the grocers, sales of take-home groceries at M&S were 8.9% higher over the 12 weeks compared with the same period in 2024.
