January spelled relief for shoppers as grocery price inflation slowed to 3.3% over the four weeks to 26^th January, according to the latest figures from Kantar.

Spending on promotions rose year-on-year, by £274 million, accounting for 27.2% of sales.

Meanwhile, health-conscious consumers spent £1.2 billion on fresh fruit, vegetables and salad in January – £193 million more than in December, and sales of low and no-alcohol drinks were 7% higher than last January.

With household budgets typically stretched at this time of year, retailers played their part in easing the pressure on purse strings, according to Fraser McKevitt, head of retail and consumer insight at Kantar.

“Supermarkets were dishing out the discounts this New Year, and consumers responded,” he said.

“Spending on promotions rose year-on-year by £274 million, accounting for 27.2% of sales – the highest level in January since 2021.

“People also turned to non-branded products to help keep costs down, with own label as a proportion of sales hitting a record high of 52.3% in January. Spending on supermarkets’ own lines was up 5.4%, helped by consumers buying premium own-label products in the couple of days leading up to New Year’s Eve,” added Fraser McKevitt.

Typically, shoppers have an eye on wellness, not just their wallets at the start of the year, and 2025 was no exception. More than 10% of the average consumer’s January grocery bill was spent on fresh fruit, vegetables and salad.

“Rolling into the new year, health tends to play a bigger role in our grocery choices,” added Nathan Ward, business unit director for usage and out-of-home at Kantar.

“Over a quarter of take-home food and drink in January is chosen with health at least partially in mind, as shoppers tell us they want to eat less processed food and feel the benefit of fibre and vitamins.”

Sales of low and no alcohol drinks were 7% higher than last January and 6.7% of households bought at least one of these alternatives.

“It’s no surprise to see the low and no alcohol trend make its mark in January but given some of the generational splits we have seen in grocery, it’s interesting that older shoppers are just as likely to take these products home as younger ones,” said Fraser McKevitt.

“Not everyone signed up for dry January though, with 49% of people buying an alcoholic drink this month – but this is a pretty big drop from December’s 76%.”

Meanwhile, Lidl’s sales rose 7.4% over the 12 weeks to 26^th January, making it three continual years of growth for the discounter, whose share hit 7.2%.

Tesco gained the most share, its 28.5% hold of the market is 0.7% higher than this time last year, and it also saw its fastest rise in sales since April 2024 at 5.6%. Sainsbury’s outpaced the market at 4.2% sales growth, increasing its share from 15.7% to 15.9%.

Convenience retailer Co-op has returned to growth, with sales rising by 0.8% giving it a 5.2% share of the market, while spending at Iceland was 1.0% higher, maintaining its share of 2.4%.

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The move comes as part of the retailer’s plans to accelerate into the second year of its three-year Next Level Strategy.

Stating the proposed closure of its cafés is a move to “simplify the business”, the closures are subject to consultation. The move involves plans to close remaining patisserie, hot food and pizza counters while making their most popular items available in the aisles.

“The majority of Sainsbury’s most loyal shoppers do not use the cafés regularly and cafés and food halls run by specialist partners are becoming more and more popular,” the retailer said.

Some 3000 members of staff will lose their jobs, including a 20% reduction of senior management roles.

Following the announcement, retail trade union, Usdaw said it would be entering into consultation talks with Sainsbury’s after the supermarket giant informed the union of its restructuring proposals.

“We understand this will be a worrying time for those affected,” said Bally Auluk, Usdaw national officer.

“Usdaw will be working hard to ensure our members are supported throughout the process and as many people as possible remain in employment with the company.

“In the meantime, we are providing our members with the support, advice and representation that they need. Any Usdaw member with concerns should contact their workplace union representative.”

CONSULTATION TALKS

Meanwhile, Sainsbury’s said it was talking to colleagues affected about what the changes mean for them and were exploring redeployment opportunities where possible.

“This is in addition to providing a support package to those affected which exceeds statutory requirements while offering opportunities to receive tailored guidance for their future career options,” said the supermarket.

The move comes amidst a wider restructuring of the business, with updates also being made to its central management structures. They have also shared plans to create space to offer more of its fresh food ranges in more stores.

Sainsbury’s Chief Executive, Simon Roberts said the decisions announced were essential to driving forward their momentum, but added they had also meant “some difficult choices impacted our dedicated colleagues in a number of parts of our business”.

“We’ll be doing everything we can to support anyone impacted by today’s announcements,” he added.

“We launched our Next Level Strategy almost a year ago and are totally focused on making good food joyful, accessible and affordable for everyone, every day. As a result, we’re seeing real momentum across our business, with a best-ever value position, leading quality and increased market share.

“As we accelerate into year two and beyond of our strategy, we are facing into a particularly challenging cost environment which means we have had to make tough choices about where we can afford to invest and where we need to do things differently to make our business more efficient and effective.”

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In a transaction expected to complete in early September, Sainsbury’s will acquire 10 leasehold stores from HHGL Limited, trading as Homebase for conversion into supermarkets.

The two Northern Ireland stores will be in Omagh and Derry~Londonderry.

A key ambition of the retailer’s Next Level Sainsbury’s plan is to offer more food choice to customers and the new locations will grow its coverage across Northern Ireland, Scotland and England.

Once converted, the shop floor area of the stores will range from approximately 15,000 to 40,000 square feet and will add a total of 235,000 sq ft to their supermarket trading space.

The new stores will showcase Sainsbury’s latest food offer with a refreshed, innovative look and feel and sustainability credentials.

CEO Simon Roberts said Sainsbury’s food business continues to go from strength to strength.

“We want to build on this momentum which is why we are growing our supermarket footprint. Our ambition is be customers’ first choice for food and these new stores will showcase some of the best that Sainsbury’s supermarkets have to offer to even more communities around the country,” he said.

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Shoppers spent £684k on chilled burgers and grills, £826k on fresh sausages and an additional £3.4 million on beer and lager.

Grocery inflation now stands at 9.6% for May – the eighth consecutive month of decline and is now sitting at a level last seen in January 2023, according to Kantar.

In the year to 12^th May 2024 £4.24 billion ran through the tills, up 8.7% year-on-year, which is an additional £341 million versus last year.

As Emer Healy, Business Development Director at Kantar explained, the average household spent an all-time high of £5602 which was up £437 year-on-year.

“Take-home grocery sales grew with shoppers visiting store more often, an average of 4.5 trips more than last year, however the number of packs bought continues to fall year-on-year by 0.3%,” said Emer.

‘We tend to see an uplift across many categories when there are major sporting events, especially alcohol’

Own-label ranges remain popular growing 9.4% year-on-year with shoppers spending an additional £160 million on the products versus last year. However, brands are still important to Northern Irish households and grew ahead of the market at 8.8% year-on-year, capturing 54.5% value market share. Also, over 22% of all sales were made through a promotional offer, a level this high has not been seen since October 2020.

Brighter days called for shoppers in Northen Ireland to kick start the barbeque season and there is a summer of sports  on the horizon, kicked off with the 2024 UEFA European men’s football.

“We tend to see an uplift across many categories when there are major sporting events, especially alcohol. Over the 12 weeks we have spent a combined £6.4 million more on beer and lager and savoury snacks versus last year,” added Emer.

Tesco maintains its position at the top of the table and is Northern Ireland’s largest grocer with a 35.2% share of the market, up 9.6%. More frequent trips and new shoppers contributed a combined additional £85.5 million to their overall performance.

Meanwhile, Lidl holds 9.2% market share, up 10.9% year-on-year. Lidl welcomed new shoppers in store alongside more frequent trips which contributed £9.3 million to their overall performance.

Sainsbury’s holds 16.9% share, up 11.5%, and welcomed more frequent trips which contributed an additional £151.6 million to their overall performance. Asda holds 16.1% of the market, up 9.8% this period and saw a boost in trip frequency, volume per trip and new shoppers which contributed an additional £9.4 million overall.

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It is now sitting only 0.8 percentage points higher than the 10-year average between 2012 and 2021, according to Kantar.

In their latest supermarket share and inflation update, Kantar reveals that take-home grocery sales rose by 2.9% over the four weeks to 12^th May.

Thanks to recent spells of good weather, barbecues have been getting their first outings of the year, with burger sales climbing by 13% and beer and wine sales up by 9% and 21% respectively. As Fraser McKevitt, head of retail and consumer insights at Kantar explained, grocery price inflation is gradually returning to what is considered more normal levels.

“Typically, an inflation rate of around 3% is when we start to see marked changes in consumers’ behaviour, with shoppers trading down to cheaper items when the rate goes above this line and vice versa when the rate drops,” said Fraser.

“However, after nearly two and a half years of rapidly rising prices, it could take a bit longer for shoppers to unwind the habits they have learnt to help them manage the cost-of-living crisis. Own-label lines are proving resilient for example, and they are still growing faster than brands, making up over half (52%) of total spending. Sales of premium own-label ranges continue to increase too, up by 9.9% compared with a year ago.”

While pressures remain on household budgets, shoppers took the opportunity to enjoy the long weekend on 4^th to 6^th May, and with a summer of sport on the horizon, including UEFA European men’s football and the Olympic Games, sales could increase for retailers.

“Major sporting events can have a big impact on grocery sales, particularly in categories like alcohol,” added Fraser McKevitt.

“Especially if it’s paired with warmer temperatures, this year’s summer of sport could deliver a welcome boost for the sector.”

Meanwhile, Lidl reached a new record-high market share of 8.1%, fuelled in part by its bakery counters, as well as its loyalty scheme. Tesco now takes 27.6% of the market – an increase of 0.5 percentage points since last year, marking its largest annual share gain since January 2022.

Its 5.6% growth in sales was matched by Sainsbury’s, whose market share nudged up 0.3 percentage points to 15.1%, while Asda holds 13.1% of the grocery market. Convenience specialist Co-op’s share of the market is now 5.4% with Iceland holding steady at 2.3%.

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