Christmas sales buoyed up by veggie price war and alcohol sales
ShelfLife reports on Kantar Worldpanel's latest review of the Irish grocery market
Print10 February 2014
David Berry, Kantar Worldpanel
There is a yo-yo approach to spending in the Irish grocery industry and we are unlikely to see sustained growth this year. This is according to David Berry of Kantar Worldpanel Ireland at its Christmas review on 6 February in Dublin.
While Berry said that there is extra disposable income in the economy due to the unemployment rate decreasing, he thinks shoppers are still extremely price conscious and will continue to be so.
Over Christmas consumers increased their spending on alcohol by 13.4% and by over 5% on luxuries such as chocolate and snacks. However, spend on the Christmas dinner ingredients fell. This was partly due to the huge discounts on vegetables in the main supermarkets in the lead up to the holidays. People spent 16% more on vegetables this Christmas but there was serious price deflation with value of vegetable spend down by 20%. In essence, people bought more than they needed because of the low prices.
Own brand upward trend
Berry also explained that premium own brand is seeing an upward trend. Lidl’s premium range, Deluxe, is said to be encouraging discount shoppers to spend more and is targeting the 40 plus age group.
Aldi is the big winner in the Irish grocery sector over the past year with over 20% growth year-on-year. Berry believes that the reason for this rapid growth is new store openings and balanced pricing. The discounter made 25 million additional sales this Christmas and basket spend has increased from €23.50 in 2012 to €25.60 in 2013.
SuperValu has remained strong in its core areas of food like meat and fish. The Musgrave group gained 45,000 more shoppers last Christmas but found that people were making smaller trips. There was an increase in baskets of under €70. However promotions and strong offers on branded goods helped its growth.
Dunnes Stores performed very well early in the year and also enjoyed strong sales in November. According to Berry, 37% of consumers surveyed said that money-off vouchers encouraged them to shop there. Dunnes sold 60% more vegetables in December 2013 versus December 2012 and this again was attributed to the deep promotional activity.
Tough at the top
Kantar reports that Tesco has seen a core food decline in the past year and reported that it lost share to SuperValu and Aldi. Berry explained that because Tesco is the number one retailer in the market it will always be targeted by the other retailers and it is very difficult to maintain the number one position. "The fact that Ireland has three major retailers competing is quite a unique position for a small economy," said Berry. Tesco faces price competition from the discounters and other own brand labels. It needs to figure out how it can attract new shoppers in the year ahead.
Innovation key to growth in 2014
Berry said that growth in 2014 will be due to innovation. "It is proven that new product development works and gets people spending". Clear pricing is another stimulus for growth. "People like rounded price points as it helps them calculate their budgets easily," said Berry.
A choice of pack sizes will also be an important stimulus for growth in the year ahead. Over one third of households are now ‘empty nesters’. This means that they want smaller pack sizes in order to reduce waste and spend. Health foods will also see growth with stores giving over more shelf space to the free-from and health food categories.
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