Biggest Christmas Grocery Spend Ever

Friday, 2 March 2018

  

Christmas 2017 saw another revenue record set for grocery sector revenue, beating 2016, which had previously been the festive period when spending hit its highest level. A significant contribution was made by the £1.4bn spent on the Friday and Saturday before the big day, with total spend in the week before Christmas totalling £3.5bn. This article describes some influential factors.

Image summarising points in text, including lowest Christmas promotional levels ever

Chart showing retailers had increased spend in Dec 2017 vs 2016, particular increase for hard discounters

Hard Discounters saw their highest ever combined penetration over the four-week period at 49.5%. Strong sales growth throughout 2017 was built on in the Christmas period, with premium tier meat making a significant contribution. Aldi’s ‘Specially Selected’ meat range grew by almost 50 per cent and Lidl’s premium turkey, gammon and beef offerings also performed very well.


Standard, value and premium own-label tiers contributed to growth for winning retailers. People spent more time shopping around for specific items this year, showing how important it is to have a strategy that appeals to everyone.

Proteins

Meat, fish and poultry had their biggest Christmas ever, sales value reached £430.3m over the four-week period. This category reflected many of the overall trends this Christmas, including the broader - but not universal - push for premium, which helped to deliver strong performance.

Tradition was influential, both fresh and frozen turkey grew ahead of other proteins (+6% and +10%, respectively). Turkey attracted new shoppers as well as gaining spend and volume from other categories, especially beef roasting joints. Premium own-label turkey in particular saw strong growth, driven by higher prices and more shoppers. Despite a strong performance last year, gammon saw a drop in volume performance, perhaps as a result of less sold on promotion (-3.5%). Strong spend growth was primarily driven by the increase in average price.

Fresh lamb joints grew ahead of beef and pork this Christmas, driven predominantly by larger baskets, with the first week of the period accounting for 32 per cent of lamb spend. Shoppers looked for standard tier lamb this Christmas despite premium playing a key role for other proteins.

Dairy

Brits spent £2.6bn on dairy products in the four weeks before Christmas (up 6.3% year on year). Dairy grew faster than both the total grocery market and fresh and chilled, which grew at +4.2% and +4.5% respectively. Despite rising prices, dairy is also growing ahead of both these markets in volume terms (+2.6% vs 0.9% and 1.6% respectively). Cheese had a strong Christmas in both value and volume terms, with shoppers particularly looking for the more speciality cheeses, such as soft continental.

Potatoes

Heavy temporary price reduction promotions drove value decline for potatoes this Christmas, with over half on offer over the 4-week period. However, chilled prepared potatoes continued to grow this Christmas, driven by more shoppers, perhaps those looking to save time over the busy period.

Christmas 2018

There is likely to be reduced inflationary contribution to growth for Christmas 2018, so it will be important for retailers to drive other key measures; for example, retailers need to understand how pricing across tiers will attract a range of shoppers. Also, the full 4-week period and the week leading up to Christmas are crucial periods, both for total grocery and in MFP. All of these factors are likely to lead to more pressure being placed on suppliers to keep costs low.