Bracknell - July 23, 2006 - IRI (Information Resources) today announced that overall value sales in the second quarter of 2004 were up by just over 2% through the major supermarkets and health and beauty retailers. But even though the market is still growing, this has slowed compared to the same period in 2003 and the first quarter of this year when growth for both stood at around 5%.
Growth in the non-food sector continues to drive the overall market, up 6.1%, while grocery sales have remained virtually static with a mere 0.4% increase.
It would be easy to blame the falling growth figures on the weather. Last year’s unusually sunny summer inflated value sales which compared to this year’s cooler conditions means that growth in many sectors is harder to achieve. Meanwhile, confectionery, snacks and soft drinks all declined, suggesting that the government's message on rising obesity is beginning to have some effect.
The prospect of rising interest rates, and warnings of falling house prices may have dented consumer confidence. Additionally, constant media attention and conflicting messages relating to our unhealthy diets may have resulted in us thinking twice about what, or at least how much, food we buy.
Trends by category
The chilled category continues to drive grocery sales with sandwiches experiencing the biggest growth in the quarter. Despite high profile social events such as Royal Ascot and Wimbledon, sales of fresh cream were down by 3.8%. Also declining were barbeque essentials, fresh sausages (-5.1%) and chilled dips and dressings (-4.7%).
Despite the May bank holidays and Euro 2004, growth in the beers, wines and spirits category did not match the first three months of the year, or quarter two of 2003. Sales still achieved a respectable 4.4% growth, but in the same period last year this figure was 7.3%. While wine and beer growth was good, the total category was slowed by the -14.5% decline in the ‘other beers, wines and spirits’ sector. This decline has been largely attributed to the maturing of the ready to drink (RTD) sector.
Unusually, overall ambient sales were down. Several manufacturers have blamed an increasing concern for what we eat on declining soft drink sales, which were down by 2.9%. This may also have affected the confectionery category which saw sales decline by 12.7%. The Easter break in April failed to boost sales in this quarter. Crisps, nuts and snacks were also down by 1.6%.
The produce sector was also down with sales falling by 1.5% suggesting that consumers have yet to adopt the governments ‘5 a day’ advice. However, the ONS has suggested that overall prices have fallen in contrast to price rises a year ago which may explain the year-on-year decline.
Sales of frozen food continue to decline, with the exception of frozen meat. Chilled food growth continues to affect the frozen category as consumers often perceive chilled food to be a healthier and more convenient option although some manufacturers have recently taken steps to combat this. Bird’s Eye has recently relaunched their ranges with an emphasis on the natural preservation process freezing provides.
The other non-food category still leads the way in non-food, particularly the miscellaneous sector (up 48.9%) which includes items such as clothes. Garden and flowers were down, probably due to the poor weather. Telephones and mobile phones saw a 20% dip in sales, possibly due to the mature nature of the market as most people who want to own a phone now do so, or trade up to more advanced handsets only available in specialist retailers.
Health and beauty sales continued to grow with healthcare achieving the highest growth in the quarter of 6.9%. Toiletries sales declined the most, down by 3.6%, driven by bath and shower products including talc.
The household category saw sales decline by 4%, compared to a 2.7% increase in quarter two last year. Only the smallest category achieved growth, other household which was up by 3% and includes items such as plugs and non-electrical kitchen accessories.
Background Data
| | 52 Weeks to end June 2004 | 12 wks to June 2004 |
| | Value Sales
(m) | % change | % contribution* | % change |
| Total Sales | £73,578 | 5.0 | | 2.1 |
| Grocery | £49,803 | 4.0 | 2.6 | 0.4 |
| Chilled | £12,027 | 6.7 | 1.5 | 4.3 |
| Beers, Wines & Spirits | £6,418 | 6.4 | 0.8 | 4.4 |
| Ambient | £14,084 | 2.4 | 0.7 | -2.0 |
| Produce | £6,263 | 4.5 | 0.5 | -1.5 |
| Fresh Meat | £3,447 | 3.6 | 0.2 | 0.2 |
| Bakery | £2,892 | 4.0 | 0.2 | 3.4 |
| Fresh Fish | £741 | 5.3 | 0.1 | -3.1 |
| Other Grocery | £57 | 13.3 | 0.0 | -2.5 |
| Frozen | £3,875 | -2.2 | -0.2 | -6.3 |
| Non Food | £23,760 | 7.4 | 2.2 | 3.1 |
| Other Non-Food | £11,601 | 12.2 | 5.3 | 13.2 |
| Health & Beauty | £7,327 | 5.0 | 1.5 | 2.3 |
| Household | £3,772 | 0.7 | 0.1 | -4.0 |
| Petcare | £1,060 | 0.7 | 0.0 | -1.6 |
Data used: 52 weeks to 3 July 2004
* % contribution is the weighted per cent change within each sector
Source: InfoScan TotalStore, Copyright © Information Resources, 2004. 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 data table here
For more information please contact:
Rebecca Schanche
E-mail: supermarketreview@infores.com
Phone: +44 (0)1344 747859