Despite slowing inflation, shopper spending power remained challenging throughout 2023 with concerns over the cost of living also impacted the way shoppers chose to make their purchases, states a recent industry report.
According to new NIQ Retail Spend Barometer which combines data from NIQ and GfK to measure the turnover in sales of FMCG and Tech & Durables products sold online and in retail stores across the UK, consumer spending in the UK on FMCG and Tech and Durables products (T&D) increased by 5 per cent last year compared to 2022. In total, this market amounted to £281.5bn in sales in 2023. This increase in spending was driven by price increases for food and personal care products.
Shopper spending power remained challenging throughout 2023 due to price increases, with prices in December still 17 per cent higher compared with the last two years. The growing sentiment around the cost of living crisis was key to driving shopper purchasing decisions throughout the year. Shoppers looked to reduce non-essential spend both on hospitality and general merchandise in favour of eating at home. This led to significant growth rates for sales in food (+7.6 per cent) and fresh food (+9.6 per cent) in the last quarter of 2023.
Concerns over the cost of living also impacted the way shoppers chose to make their purchases. In the last quarter of 2023, sales of private label items exceeded those of brands in UK grocery. Moreover, increases in supermarket promotions, which rose to the highest levels (25.3 per cent) in four years also helped FMCG sales as inflation slowed at the end of 2023.
Ben Morrison, retail services Director UK & IRE at NIQ, said, “With the cost of living crisis dominating headlines and consumer mindsets over the last year, it is no surprise that this impacted consumer spending. Shoppers sought to make savings where necessary, which came at a cost to other categories, such as technology and durable goods. Despite inflation slowing, shoppers are still impacted by the rise in prices and in 2024 we anticipate they will continue to strive for value and affordable solutions in where and how they shop. Grocery retailers will therefore continue to drive an intense focus on competitive pricing, promotions and loyalty card benefits.”
Michael McLaughlin, president, Global Retail at NIQ, said, “Market dynamics and consumer behaviour are changing ever faster. In a competitive environment, fragmented data and a dose of gut feeling are no longer enough. That’s why we use the Full View to offer our clients a comprehensive, data-based understanding of market developments and clear, actionable recommendations for future growth.”
