‘Promotions to drive increased discretionary spend’

One in four shoppers are buying the products which are on promotion, shows recent data, also highlighting convenient meal options, cheaper meal ingredients and healthier snacking as the main flavour of past few weeks.

According to new data released today (5) by NIQ, total till sales at UK supermarkets slowed (+5.3 per cent) in the last four weeks ending 24th February 2024, according to new data This is a slight slowdown compared to the growth (+6.6 per cent) reported last month, a result of food inflation falling to 5 per cent.

However, grocery retailers capitalised on big events like Valentine’s Day, Pancake Day and the Chinese New Year to attract shoppers through promotional offerings, states NIQ report, adding that this strategy likely played a part in boosting shopper spend on promotions. In the last four weeks, 24 per cent of all FMCG sales were bought on promotion, rising to 35 per cent for branded items (up from 31 per cent a year ago). Sales of supermarket own-label goods also increased to 16 per cent compared to 13 per cent last year.

NIQ has identified four key category trends since the start of 2024. The first is shoppers buying convenient meal options which is reflected in strong growth in the last four weeks for prepared fresh meat products (+13 per cent), frozen chips (+13 per cent), cooking sauces (+7 per cent) The second key trend is cheaper meal ingredients; rice & grains (+13 per cent), canned veg (+10 per cent) and frozen poultry (+8 per cent). The third is a shift towards healthier snacking with growths in dried veg & pulses (+23 per cent) and fresh prepared fruit (+7 per cent).

And finally, the fourth key trend was events. With Pancake Day taking place in February, there was also a rise in sales for baking ingredients such as baking mixes (+24 per cent), flour (+18 per cent), eggs (+16 per cent), golden syrup (+29 per cent), and chocolate spread (+27 per cent) during the week ending Feb 17.

NIQ data also reveals that online channel growth (+7.9 per cent), remains ahead of in-store (+3.8 per cent) with the online’s market share up to 11.2 per cent compared to 10.8 per cent this time last year. However, despite February being the warmest and wettest on record in the UK, NIQ data shows shoppers increased their in-store visits (+0.9 per cent) compared to last year.

Mike Watkins, NIQ’s UK head of retailer and business insight, said, “Whilst industry volumes remain positive, many brands are now chasing growth having lost category share during the high period of inflation and are keen to communicate  their own value among consumers. We expect the levels of promotion to continue to creep up over the next few months. Brands are also going to be important to sustain the recovery in FMCG spend and with Euro 2024 and Paris Olympics on the horizon, branded promotions will be the drivers of increased discretionary spend post Easter.”

Watkins adds, “The resilience of online grocery shopping during the highest period of inflation in decades, when household penetration fell a little, is due to the changed lifestyles of consumers. When food inflation was in double digits, shoppers did cut back on large ‘trolley’ shops and online was also impacted. Whilst this growth is now against a weak comparative (-2.5 per cent), it is also a normalisation of shopping behaviour for the one in four households who continue to shop this channel every four weeks and suggests that omnichannel shopping in food retail is here to stay.”