UK retailers enjoy a buoyant Christmas

January 1, 2010

Figures released by TNS Worldpanel and the CBI paint a healthy picture for British retailers but research by Mintel in the US finds American shoppers are spending less.

TNS Worldpanel data for the 12 weeks ending 29 November 2009 found the UK grocery market buoyant in the run-up to Christmas.

If the current trend continues, the UK’s grocery sector will shortly see an end to recessionary purchasing behaviour, it says.

Edward Garner, communications director at TNS Worldpanel, said: “The market is seeing several signs to indicate an end to the recessionary buying behaviour that has characterised the last year is imminent. Premium ranges – particularly Tesco Finest – are in growth, while the hard discount sector, including Aldi, Lidl and Netto, are stagnant with no year-on-year share growth. This is in contrast to this time last year when the discounter revolution was in full swing and Aldi had just recorded a 25% growth.”

The positive outlook in this sector is reflected in the strong performance of the UK’s largest retailers.

Asda, Sainsbury’s and Morrisons have all increased their market share. Morrisons has performed particularly well and has a record market share of 12.1%.

The Co-operative is recording share increases as Somerfield conversions take effect and premium retailer Waitrose has posted a sparkling 14.8% growth rate.

In the run up to Christmas the Co-operative and Somerfield unveiled Christmas price cuts and a promotional package claimed to be worth over £200m in savings to their customers.

Tesco has held its share at 30.6% after periods of share loss throughout 2008 and 2009. This may seem unremarkable except for the fact that its aggressive promotional programme, particularly on premium ranges, may have been expected to depress share through self-imposed price deflation, said Garner.

The CBI’s latest Distributive Trades Survey, meanwhile, found retail sales grew at their fastest pace in two years and it was expecting growth to pick up further in the run up to Christmas. The survey also found that business sentiment about the retail sector over the coming three months is now positive for the first time since August 2007.

The outlook is less positive in the US, however. Mintel’s survey of shoppers ahead of ‘Black Friday’, the biggest shopping day of the year, found 63% of Americans budgeting more than they did last year.

“Coming off a year of fluctuating stocks, rising unemployment and a persistent recession, it’s not surprising that shoppers still haven't loosened their purse strings,” said Chris Haack, senior analyst at Mintel.

“People remember last year’s deep holiday discounts, so despite retailers saying they won't slash prices as severely this year, many shoppers might hold off on hitting the stores.

“We’re all bargain hunters in today’s economy,” added Haack. “People want to feel like they’re getting a deal, and they’ve basically come to expect sales. It’s up to merchandisers to create marketing specials that meet bottom lines, while making shoppers think they're stealing away with a great find.”

To view the video commentary from Ed Garner or to get further information please visit tnsglobal.com video