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While high street retail pundits are reporting that this Christmas was the worst for a decade, trading results for the UK’s supermarkets show a much brighter picture. Figures released today by Market Research giant ACNielsen place sales within the grocery channel for the 4 weeks to Christmas Day showing a strong 9.2% (source: ACN Scantrack) growth versus the same period last year.
Across the industry as a whole business was strong in the weeks running up to Christmas but more difficult in the week between Christmas and the New Year. Over 99% of UK shoppers visited a major Supermarket in the run up to Christmas spending on average £267 each over the 4 weeks to Dec 25th.
Mike Watkins, Manager of Retail Services at ACNielsen said that, “As ever, we saw a intensely competitive marketplace this Christmas. Shoppers are continuing to demand the one-stop solution and so the large out of town stores really came out top this year with growth here hitting 10.5% in the 4 weeks prior to Christmas (versus the same period last year). These stores cater for the food shop but also offer the time starved and value hungry British shopper a convenient way to buy their gifts at great prices. In comparison, high street grocery outlets, which largely depend on their food offerings haven’t fared as well with growth of around 2%.”
It is no surprise therefore that Tesco and Asda, with their increasing number of mega-stores were the clear winners over the festive season. Tesco, who took almost 30% share of trade in these key 4 weeks, saw sales up 17% YoY. Amazingly in the Christmas period, 58% of UK shoppers visited a Tesco store; over the course of 2004 77% did. It seems the retailer who has recently posted record results can do no wrong and these Christmas results are a fantastic finish to a truly outstanding year.
Asda’s sales were slightly ahead of the market at +10% YoY and it had the strongest spend per visit, with average basket size at £41 in these 4 weeks. There are many fewer Asda outlets than its nearest rivals, Tesco or Sainsbury’s but Asda stores tend to be very large and the range offered within so wide that consumers are willing to travel further. It is a destination shop - so it makes sense that once there, consumers will spend more. The retailer, owned by American company Wal Mart, was visited on average 3.5 times by its shoppers in the 4 week period preceding Christmas with average spend at £142 per person for the whole period. Though average basket size at Tesco was slightly smaller, shoppers visited on more occasions so spend in the 4 weeks to Christmas here averaged at £148 per shopper.
Sainsbury, the country’s 3rd retailer has lost shoppers and market share over 2004. However, percentage of shoppers visiting grew slightly over Christmas with 37% of consumers buying in Sainsbury’s over the 4 weeks to Dec 25th compared to 36% in the same period last year. The sales of grocery products within Sainsbury’s since late summer have also improved with market share increasing from a low point of 16.5% back to 16.8%. This suggests that there remains much to play for as a focused food retailer and with the still untapped potential of small store formats. Without significant large store acquisitions, which will be difficult to find and fund, it will be a challenge for Sainsbury’s to get critical mass on general merchandise, clothing and electrical - the areas which are driving forward Tesco’s & Asda’s sales, however the challenge is by no means insurmountable as first indications suggest that the TU clothing range is performing well, perhaps this will mark the beginning of a recovery for the retailer.
Though a much smaller player, Waitrose was another clear winner. The retailer which is part of the John Lewis Group enjoyed sales growth of 20% YoY in December. Waitrose saw a higher spend per visit (£33) and higher spend per buyer for the 4 weeks (£114) than Morrison’s who are now the UK’s 4th largest retailer. Mike Watkins commented, “Though consumers are always on the look-out for bargains and have taken advantage of the lower prices and special promotions supermarkets offered pre-Christmas, they also like to indulge. The strong Waitrose performance is indicative of the consumer tendency to trade up to premium or luxury offerings for some types of products over the festive period. These results place Waitrose in a good position for the start of 2005, a year when we expect to see significant growth from the retailer following its acquisition of 19 new stores, part of the dispersed Safeway estate, earlier in 2004. ”
In the fast changing world of retailing, the strong have just got stronger. Savvy consumers are voting with their feet and insisting on a combination of value for money and the convenient ability to shop for a wide range of products under one roof. The high street may have seen dark days this Christmas but the sun sparkled over the supermarket giants who have accomplished this magic combination.
About ACNielsen
ACNielsen is the world’s largest Marketing Information company and is owned by VNU.VNU is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media measurement and information (Nielsen Media Research) and business information (Billboard, The Hollywood Reporter, Computing, Intermediair). VNU is active in more than 100 countries, with headquarters in Haarlem, the Netherlands and New York, USA. The company employs 38,000 people. Total revenues amounted to EUR 3.8 billion in 2004. VNU is listed on the Euronext Amsterdam (ASE: VNU) stock exchange.
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