Bracknell - July 26, 2005 - IRI (Information Resources) today announced that overall sales in the second quarter of 2005 were virtually static, going up by just 0.2%, through the major supermarkets and health and beauty retailers.
The fall of -1.7% in grocery sales means that non-food is continuing to drive the small amount of growth. Non-food sales were up by 2.5%, but this is a decline of 4.4% on the growth seen in the same period last year. Sales for the full year show a similar trend with total sales up by just 0.5%, again driven by a 3.6% rise in non-food and a fall of -1.4% in grocery.
Rising interest rates have been identified as a key factor in the recent retail slowdown, while they are not that high when compared to historical standards, the large amounts of debt carried by many consumers means they are sensitive to any increases.
The slowdown in the housing market and rises in oil prices have also dented consumer confidence. A recent article in the Retail Bulletin reported that June saw the highest amount of cash inflow into savings accounts since 1997! This provides additional evidence that consumers are becoming far more cautious about what they do with their surplus cash and this is being reflected by flagging consumer spending in store.
Trends by category
Fresh fish showed good growth (11.2%) compared to the same quarter in 2004, with both pre-packed and loose fish proving popular with consumers. The recent spell of good weather could be a contributing factor as people look for lighter and healthier alternatives to put on the barbecue or have as their main meal.
In the produce sector nuts and dried fruit saw an increase of 44.3% on the previous year, as the perceived health benefits look like they are still encouraging consumers. Sales of fruit increased for the quarter but vegetables and salads declined. Recent research suggests the average consumer only has two and a half portions of the government recommended ‘5 a day’. It would seem that many may prefer the ease of a piece of fruit over the preparation of fresh vegetables.
Sales in beers, wines and spirits were static for the year but with a fall in growth of -1.1% compared to the same period in 2004. One factor to help explain the slump is the early Easter holiday, with the increased sales generated by the holiday falling into the first quarter, rather than the second quarter of this year. Secondly in June last year, retailers benefited from the so-called “football effect”, which led to increased spending on alcohol in the run up to, and during, the Euro 2004 football championships.
The chilled sector showed a decline of -0.2% in year on year sales. Chilled fruit juice saw strong growth, which may be due to launches of premium smoothie variants and their additional advertising in recent months. Consumer perceptions that chilled equivalents are a healthier option also means that the declines in frozen continue.
The ambient sector saw a decline for the year and the quarter, largely driven by a fall in sales of soft drinks, biscuits and crisps, snacks and nuts. Consumers seem to be paying more attention to reports on obesity and these declines show that they are cutting down on their intake of what they see as unhealthier products. Canned fish is performing well after declines in previous quarters. A recent campaign to promote the benefits of oil rich fish such as herring, mackerel, trout & salmon could be playing a part in this turnaround.
The ‘other non-food’ sector continues to be the main driver in the growth of Non-Food. Pre-orders of the new Harry Potter book and the subsequent price wars between retailers have helped to boost book sales this quarter. Early summer sales on clothes ranges may have also helped to push up value in the ‘misc non-food’ category. Lottery sales also remain strong.
Suncare has driven growth within health and beauty as consumers stock up for their summer holidays and take advantage of the sunny weather the UK has been experiencing. Oral hygiene is also showing good sales growth which could be attributed to the plethora of premium ranges within toothpastes and oral care products that are coming to market and adding value.
The biggest drop in household goods came from household sundries which lost -8.4% of sales compared to 2004. Foils, wraps and bags also declines and this is probably a reflection of the low amount of innovation in the category. Detergents and laundry saw a drop of -5.4% on quarter two last year and this may be because of increased price competition on everyday items between the big retailers. In turn, this is leading to a lower everyday price and having a big impact on value sales.
Background Data
| |
52 Weeks to end June 2005
|
12 wks to June 2005
|
| |
Value Sales
(m)
|
% change
|
% contribution*
|
% change
|
| Total Sales |
£73,917
|
0.5
|
|
0.2
|
| Grocery |
£49,096
|
-1.4
|
-1.0
|
-1.7
|
| Fresh Fish |
£766
|
3.4
|
0.1
|
11.2
|
| Other Grocery |
£63
|
10.4
|
0.0
|
20.4
|
| Produce |
£6,261
|
0.0
|
0.0
|
4.1
|
| Beers, Wines & Spirits |
£6,415
|
0.0
|
0.0
|
-1.1
|
| Chilled |
£12,003
|
-0.2
|
0.0
|
-2.9
|
| Bakery |
£2,860
|
-1.1
|
-0.1
|
-3.1
|
| Fresh Meat |
£3,383
|
-1.8
|
-0.1
|
-2.9
|
| Ambient |
£13,826
|
-1.8
|
-0.5
|
-1.6
|
| Frozen |
£3,520
|
-9.2
|
-0.7
|
-10.6
|
| Non Food |
£24,662
|
3.6
|
1.2
|
2.5
|
| Other Non-Food |
£12,694
|
9.4
|
4.4
|
7.0
|
| Health & Beauty |
£7,346
|
0.3
|
0.1
|
0.4
|
| Petcare |
£1,036
|
-2.3
|
-0.1
|
-2.2
|
| Household |
£3,547
|
-6.0
|
-0.9
|
-6.0
|
Data used: 52 weeks to 2 July 2005
* % contribution is the weighted per cent change within each sector
Please note data in this report is taken from the InfoScan TotalStore service which does not currently include Morrisons data. Some of the sales decline could be attributed to the conversion of Safeway stores to the Morrisons fascia.
Source: InfoScan TotalStore, Copyright © Information Resources, 2005. All rights reserved. InfoScan TotalStore tracks the sales of all goods sold in the following major retailers in Great Britain: Asda, Boots, Co-ops, Iceland, Safeway, Sainsbury’s, Somerfield / Kwik Save, Superdrug, Tesco and Waitrose.
Download the full report here
For more information please contact:
Rebecca Schanche
E-mail: supermarketreview@infores.com
Phone: +44 (0)1344 747859