There has been phenomenal grocery sales over the last 12 weeks driven by the panic buying during March. Kantar reported this week that UK supermarkets’ sales grew by 9.1% during the 12 weeks ending 19 April 2020. Waitrose at 9.4% growth, followed by Sainsbury at 8.6% and Tesco at 7.2%, with all other retailers showing growth.
The Latest 4 Weeks – April 2020
But, the latest 4 weeks shows growth slowing to 5.5%, with April grocery sales £524m higher compared to last year, and shoppers increasing visits to supermarkets to 14 trips during that time. This is a significant bump back to earth compared with the 20.6% increase in March.
Tesco achieved growth of 4.6%, which was higher than Lidl (+4.5%). Aldi at-1.1%, reversed their trend of superior growth over recent months and years.
ASDA suffered, plummeted from 12 week growth of 3.5% to a decline of 4.2% over the 4 weeks, Morrisons tumbled from the 12 week growth of 4.3% to a decline of 2.8% Sainsburys have dropped to 3%, behind the market.
It is the discounters who have slowed most dramatically, both by 10% points from the 12 to the 4 week sales read, Aldi dropping from 8.8% to -1.1% decline, with Lidl declining 14.8% to 4.5%
So, what, if anything do I surmise from this 4 week slow down? This performance may show some of the strengths and weaknesses of the retailers’ current business models.
- Ocado’s performance of 19.4% growth over the 12 week period
- Coops growth from 23.3% in March to 33.5% in April
- Iceland’s 15% growth in the 4 weeks of April.
The Virus Vital 3?
- Ocado offers only online delivery, allowing access to food when shoppers are isolating.
- COOP are neighbourhood retailer, they are easy to reach on foot, ideal when we are encouraged to exercise everyday but not undertake essential travel.
- Iceland’s overtrade in frozen product’s is suited to the panic buyer who is worried about an uncertain future and the length of lockdown.
Who has The Virus Vital 3?
If these are the success factors to grocery shopping in life under lockdown, then Tesco has them all.
Tesco’s impressive 4 week performance may be down to the fact that it has the biggest and broadest portfolio of stores; Extras to stock up, but also raft of locals and express stores to cater for neighbourhood needs and missions. This store offer, combined with an online operation that has efficient “dark stores” and store picking, has enabled it to achieve 1 million plus online orders a week through the biggest online fleet on the road, as well as click and collect services. It, of course sells Frozen and other long life products.
Is Sainsburys’ slowing pace due a smaller online “dark store” infrastructure compared to Tesco?, or something else such as supply chain or not being able to keep up with the aggressive recruitment that Tesco’s PR has been very vocal about?
ASDA and Morrisons
ASDA and Morrisons do not have a range of store sizes and formats, so maybe the prospect of queues outside their large stores was just too daunting for shoppers? Their fleets of online vehicles and online operations are also significantly smaller, as they have been later to the party compared to Tesco and Sainsburys.
The COOP will have benefited from its thousands of smaller stores in city neighbourhoods, towns and villages serving communities across the country, enabling consumers to stock up locally and regularly. As convenience stores across the country seeing massive, as reported by Kantar that Independent and symbol retailers, such as Spar and Londis, also benefited from lockdown shopping patterns, with growth of 40.5%.
Iceland’s offer has come into it’s own at this time, as shoppers reportedly bought more freezers and stocked up on frozen essentials during panic buying. Sales of freezers sales had increased by approx. 200 per cent compared to early March last year as reported by ao.com in early March, with its busiest trading day on record in the first week of March, with John Lewis and Currys PC World reporting similar demand spikes.
But, the discounters are below par. Have Aldi and Lidl suffered due to their smaller ranges and lack of shopper’s ability to buy a substitute in store?, or is it the lack for store format breadth and the lack of online shopping? Their models have not fared so well as they do not have the combination of the “virus vital 3” that Tesco has been able to combine successfully.
But this is life under social distancing, isolation and lockdown, these 3 Covid factors will not reign forever; it is a moment in time (although maybe protracted).
The New Normal?
But, without the “Virus Vital 3”, Lidl has slowed in growth over the last 4 weeks, but it is till the grocer with the second highest sales growth, against a competitors that had them all.
Under the “new normal”, value for money will be even more important to shoppers, retailers provide access to it will change.
I believe the discounters will come roaring back with their own mechanisms to cope the “new normal” of Covid 19 and grasp that change.
Phil Banfield – is the MD of VentureField Consulting – Specialising in FMCG Go2Marlet Consultancy & Execution. Est.2008
Source: Date – Kantar Worldpanel FMCG data for the period to 19 April 2020.
Photographs: Phil Banfield