Christmas food and grocery shopping to hit £5bn

UK consumers overall were predicted to spend £16bn on Christmas this year – £201M more than last year.

Spending on food and grocery items is expected to remain flat – registering just a 0.3% rise on 2014. Blocks on progress were likely to be the continued pressure applied by the limited range discounters on the big four retailers – Tesco, Asda, Sainsbury and Morrisons.

General discounting and promotions across the sector were also expected to keep prices low and impact margins.

Discounters moving up market

Conlumino retail analyst Greg Bromley said Christmas trading would be characterised by the discounters moving up market.

“This year is seeing the discount grocers – such as Aldi, Lidl and Iceland – continue to make incursions into the premium end of the market, offering wider luxury ranges and speciality foods like lobsters,” said Bromley.

“This will help them to win spend from the big four grocers, especially at a time of year when many consumers look to trade-up to more premium lines.”

Tesco led the Christmas trading

Last festive season Tesco led the Christmas trading, with a 16.5% market share. This was followed by Asda accounting for 12.1% of the market and Sainsbury at 10.2%.

“The big four typically perform strongly at Christmas, thanks to their range depth, strong price perceptions and convenient accessibility,” said Bromley.

“However, this year, we expect the discount food and grocery players to make gains, while the other discounters and single-price players – such as B&M, Home Bargains and Poundland – are also in a strong position to win spend.”

Christmas shoppers know that the major grocers were likely to have sizeable ranges, especially on food and the more impulsive small gifts, he said. “However, this year the discount retailers are likely to win a greater share of spend, especially on food and decorative items,” he said.