Bracknell, UK - March 9, 2006 - Information Resources, Inc. today announced that overall sales for 2005 were up by 3.2% through the major supermarkets and health and beauty retailers. Sales for the final quarter of the year were up by 4.1%, indicating that retailers enjoyed a buoyant Christmas period which was boosted by an extra trading day.
Non-Food is the main driver behind the growth with a 6.2% increase in sales; Grocery also showed growth with an increase of 2.9% for the quarter and 1.7% over 52 weeks.
Recent research suggests that UK supermarkets have nearly doubled their sales of non-food items like CDs, DVDs and clothing in the last five years, so perhaps it is unsurprising that there is such strong growth in this area. Supermarkets also dominate the children’s clothing market and big price reductions have helped them to steal share from the high street.
In Grocery retailers seemed to take a more cautious view of sales in the run up to Christmas 2005 and, with lower stock levels, have not been as reliant on pre-Christmas discounting as in previous years. Trends for health and wellness, premium/indulgence and convenience products are also driving value, with shoppers prepared to pay a premium for the range of benefits these products offer.
Trends by category
Growth in Produce is up by 5% for the full year as ‘better for you’ and ‘5 a day’ messages increase volume sales. Nuts and dried fruit is a key driver behind the growth with sales up by a third over the year. In vegetables the increased popularity of organic and exotic ranges means prices are rising and increasing value.
In Beers, Wines and Spirits growth is up 3.3% with sales of sparkling wine and champagne helping to boost value. A strong economy and lower prices mean that the Brits are cracking open the fizz more often and consumption has risen 25% over 2 years. Cider has also seen something of a revival thanks to a trendy new image – the result of a significant amount of investment and innovation in the category.
Ambient sales have remained virtually static at 1.4% over the year, but have grown by 2.6% for the quarter. Growth in cooking products and canned fish has helped to offset the decline in ambient ready meals, which is still suffering after the Sudan-1 scare earlier in 2005. Cooking oils have seen a surge in sales as shoppers spend more on premium olive oils, in response to growing health concerns, and experiment with speciality oils, including sprays, non-olive/seed based and flavoured oils.
The Chilled sector has seen a slow down in value with growth at just 1.1% for 2005. Promotional activity and cheaper and wider reaching chilled offers from less premium retailers have led to massive drops in price paid. Ready meals and sauces are in decline while milk, fruit juice and soups are all gaining. Organic milk has gained popularity with sales boosted by publicity around its health benefits, in fact, according to a study by the University of Aberdeen, organic milk may contain up to 71% more Omega 3 or essential fatty acids than regular milk.
Fresh Fish sales have increased by an amazing 14.6% over the year. This is the result of health campaigns and the efforts of consumers to introduce low-fat, fresh produce into their diets.
Year on year sales in Fresh Meat have remained static. Poultry sales declined during the quarter and this can be attributed to public fear over an avian flu epidemic which featured prominently in the news before Christmas. Increases seen in sales of lamb and beef for the same period suggest that consumers opted for ‘safer’ options instead of more traditional chicken or turkey.
Frozen continues its decline with sales down -6.7% for the year. Chilled and fresh products are perceived to be healthier and shoppers are moving away from their frozen equivalents; those shoppers that remain loyal to the freezer are buying less leading to a small but ongoing loss of sales. Changes in product ranges are also having an impact; often new products do not contribute as much as those that have lost listings, substitutes are not made obvious to the shopper and this ultimately leaves a big year on year deficit.
Other Non-Food is a major driver in non-food with an increase of 7.6% for the quarter. This is not unexpected as retailers are continuously improving their non-food offering in order to provide a ‘one-stop’ shop for their shoppers. Clothes, CDs, DVDs and books have all proved to be growth areas as consumers pick up bargains with their groceries.
In Health and Beauty growth is being driven by Skincare with the anti-ageing market playing a key role. A host of new products featuring skin brighteners, firming agents and cellulite reducers with anti-aging effects have been launched and shoppers are willing spend extra for the perceived value of reformulated ranges and line extensions. Male grooming has also become a lucrative market and the ‘metrosexual’ male is happy to pay a premium for grooming products. New ranges have been launched that mirror the technological advances available in many of the products on offer to women.
The baby food category is also growing and has been aided by the increased availability and popularity of organic produce. One baby in three now eats organic food and with its higher price tag this is increasing the value of the market.
Year on year sales in Household declined for the year but increased by 3.6% over the quarter. Pushing this increase are household paper and sundries such as aircare. Recent reports have suggested that Britons are developing more luxurious tastes when it comes to their toilet roll and are prepared to spend more on premium brands. This trend seems to be even more prevalent around the Christmas period, with many households upgrading from their usual brands to impress guests!
Background data
| | 52 Weeks to end Dec 2006 | 12 wks to Dec 2006 |
| | Value Sales
(m) | % change | % contribution* | % change |
| Total Sales | £81,489 | 3.2 | | 4.1 |
| Grocery | £54,219 | 1.7 | -1.1 | 2.9 |
| Produce | £6,994 | 5.0 | 0.6 | 4.6 |
| Beers, Wines & Spirits | £7,102 | 3.3 | 0.4 | 3.3 |
| Ambient | £15,305 | 1.4 | 0.4 | 2.6 |
| Chilled | £13,039 | 1.1 | 0.3 | 2.8 |
| Other Grocery | £452 | 35.7 | 0.2 | 37.1 |
| Fresh Fish | £917 | 14.6 | 0.2 | 16.5 |
| Bakery | £3,075 | 0.3 | 0.0 | 4.2 |
| Fresh Meat | £3,693<
|
|
 |
|
 |