Grocery sales chalked up the strongest year-on-year sales growth of any retailing sector, according to the Confederation of British Industry’s (CBI’s) latest monthly Distributive Trades Survey (DTS).
Barry Williams, CBI DTS chairman and Asda chief merchandising officer for food, said shoppers were making festive purchases earlier than normal. “The strongest sales growth for a quarter of a century is a big boost for retailers as they head towards the climax of the crucial pre-Christmas trading period,” said Williams.
‘Caught the Christmas bug early’
“Shoppers may have caught the Christmas bug early and brought some of their spending forward. This has been a tough year for many retailers and parts of the sector are still struggling. Increasing disposable income from real wages growth, and falling fuel prices are giving retailers reasons for optimism but we’ll need to see in the New Year whether the upbeat mood takes hold.”
The sales boost will come as welcome relief, after the Black Friday price-cuts were embraced more widely by more UK retailers than ever before, said Williams. Also discounting played an important part in helping sales, encouraging more customers into stores and online to buy more widely.
The DTS survey of 122 firms covered the fortnight ending December 11 and includes the sales-boosting effects of Black Friday.
While sales were expected to rise more slowly in the year to January, robust growth was still expected, resulting in the strongest growth in orders placed with suppliers for a year.
Meanwhile, shoppers are predicted to spend £6.5bn at the UK’s leading supermarkets in the fortnight up to Christmas, said market research organisation Nielsen.
Leading supermarkets
The purchases are expected to be driven by a big rise in TV and press advertising. In the first week of December, the leading supermarkets spent 36% more on TV and press advertising than the same week a year ago. In the four weeks ending December 6, spending totalled £63.4M – about 9.2% more than the same period last year.
Aldi spent the most over the period at £9.8M, 26% more than last year. But it was fellow discounter Lidl which increased spend the most – up by 85% to £6.7M.
Nielsen’s UK head of retailer and business insight Mike Watkins said: “Retailers are investing heavily in advertising to tempt shoppers into their stores for the peak trading period which starts today [December 19].”
Watkins added: “Many shoppers have been cautious with their spending all year. But savings made from recent price wars could now be used for treats in the run up to Christmas. A third of households will shop at Aldi or Lidl this week, so the major supermarkets face intense competition for this seasonal trade-up.
“Overall, shoppers are expected to spend over £6.5bn in the two weeks up to the big day, so there’s still much for the retailers to play for in the remaining days of Christmas trading.”