Lower Inflation Set To Tempt Shoppers Back To UK Stores, Says NIQ

By Steve Wynne-Jones
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Lower Inflation Set To Tempt Shoppers Back To UK Stores, Says NIQ

With the UK now experiencing lower food inflation, the "next battleground" for the country's top retailers is likely to focus on encouraging shoppers back to stores, according to Mike Watkins, NIQ’s UK head of retailer and business insight.

Watkins was commenting on the back of NIQ data that showed that total till sales at UK supermarkets grew by 5.4% in the four weeks to 23 March, a slight increase on the 5.3% reported in the previous four-week period.

"The wet and cold weather in the first quarter of the year may have deterred some store visits, but we saw that the early Easter offered some attractive seasonal promotions which encouraged shoppers to buy more," Watkins commented.

"When drier, warmer spring weather eventually arrives this will continue to support volume growth across all channels."

Food inflation in the four-week period stood at 3.7%, which was down considerably on the 15% recorded in the same period the previous year, with shoppers also increasing their spend (£20.10, up from £19.50 in the corresponding period last year).


Category Growth

Lower food inflation resulted in modest growth rates for various grocery categories, NIQ's data showed, including packaged grocery items (+3.5%), frozen foods (+3.1%), delicatessen products (+3.0%), beers, wine, and spirits (+2.7%), bakery items (+2.4%), and dairy products (+1.8%).

However, consumers continued to limit their spending in some areas, such as household items (-0.5%) and pet care products (-3.7%).

Elsewhere, visits to stores saw a modest increase (+1.1%). However, there was a slowdown in the growth of online purchases (+3.1%), resulting in online's share of FMCG spend declining to +10.9%, down from 11% a year ago.

Volume Improvement

“As inflation slows, we have seen an improvement in grocery sales volumes during Q1," Watkins said. "A driver of this was the further fall in food prices in March, together with intense competition amongst the supermarkets looking to drive footfall with promotional offers as seen on Mother’s Day and in the weeks leading up to Easter.

"However, overall consumer spend remains under pressure as many household bills continue to increase above CPI and this is reflected in the continued weak consumer confidence.”

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