UK Food & Grocery Sector Report summary

January 2021

Retail sales rose by 0.8% in December, year-on-year, according to Retail Economics. Total online retail sales increased by 45.8% in December, value and non-seasonally adjusted, according to ONS. Shop price inflation fell by 0.6% in December, excluding fuel, according to ONS. Food & Grocery retail sales rose by 7.2% in December, year-on-year, value and non-seasonally adjusted, according to Retail Economics. Average weekly sales for Food & Grocery were £3,463m in December, according to Retail Economics.

Food and Grocery –Retail Economics Index: December 2020

Food sales growth rose by 7.2% in December, year-on-year, against a 0.9% rise a year ago, slowing on the strong rise in November. Resultantly, growth underperformed the three-month average of 8.2%. Throughout 2020, food sales growth rose by 7.0%, outperforming all other sectors in a year severely impacted by the… read more

Christmas trading

The Christmas trading period continued in a similar vein to the national lockdown in November, introducing tiered restrictions at the beginning of December which disrupted the typical pattern of consumer spending over the festive period. Some consumers brought their Christmas shopping forward into the November trading period, particularly of non-perishable items and Christmas items such as… read more

Transference of spend from hospitality

The announcement of a new strain of the coronavirus (14 December) was quickly followed by tighter restrictions for a part of London and the South East. The closure of the hospitality sector led to a further transference of spend to the grocery sector. Data from CGA suggested that just 11% of pubs and 5% of restaurants were open during December, causing sales to decline by 81.1% and 57.9% respectively. Highlighting the damning impact of the pandemic, separate data suggested that sales growth in the hospitality sector fell by over 50% in 2020, compared with… read more

Discounters shine over Christmas

This all culminated in a step change in retailer performance over the festive period. In terms of the big four supermarkets, Sainsbury’s was the strongest performing (like-for-like measure) recording an 8.6% rise in sales growth (15 weeks to 2 January), closely followed by Tesco (+8.1%, 6 weeks to 9 January) and Morrison's 7.3% rise (9 weeks to 3 Jan) … read more

Food –BRC-KPMG Retail Sales Monitor: December 2020

According to the BRC, total Food sales rose by 7.3% year-on-year in the three months to December, stronger than the 7.0% rise in the previous month, the highest rate on record. On a like-for-like basis sales rose 6.8%. Sales growth was supported by the changes to covid-19 restrictions towards the end of the month with some transference of gifting to supermarkets reported as non-essential retailers were forced to close in London and the… read more

Online Food –Office for National Statistics: December 2020

Online food sales growth remained strong in December, rising by 92.5% year-on-year, compared with a 6.7% fall in the same month a year ago. The slowdown on the previous month meant online sales growth underperformed the three-month average of 100.1%, but remained above the 12-month average of… read more

Macro Factors – Housing Market Activity

Mortgage approvals accelerated further in November to 104,969 up from 98,338 in the previous month and significantly ahead of the previous six-month average of 65,733. It was the sharpest rise in approvals since August 2007. Notably, mortgage approvals in the 11 months to November 2020 are broadly in line with the corresponding period in 2019 and are up by 61% compared to the same month a year ago. The number of re-mortgaging approvals edged up, totalling 35,107 in November up from 33,089 in… read more

Macro Factors – Consumers

Household consumption rose by 19.5% in the third quarter of 2020. The main drivers were increased spending in restaurants and hotels, and transport. Household consumption remains 9.8% below its Q4 2019 level. GfK’s Consumer Confidence measure improved by seven points to -26 in December, this is 11 points lower than a year ago. All five measures within the index increased compared to the previous… read more

Macro Factors – Ipsos Retail Performance

Footfall fell by 53.7% in December 2020 year-on-year, according to latest figures from Ipsos Retail Performance (which measures footfall in over 4,000 non-food stores across the country). The steepest declines in footfall for the month of December were in London & South East (-61.9%) followed by Scotland & N Ireland (59.2%) and The Midlands (-52.1%). Similarly, footfall fell in SW England & Wales (-50.9%) and Northern England (-44.8%) … read more

Macro Factors – Labour Market

The latest ONS labour market data shows a significant increase in unemployment rate while employment rate continues to fall. Though redundancy levels reached record highs, total hours worked increased from the low levels in the previous quarter. The number of paid employees fell by 2.7%, some 828,000 employees in December compared with February 2020 according to flash estimates using PAYE data – around 52,000 higher than in… read more

Macro Factors – Earnings

For November in nominal terms (unadjusted for price inflation): Average regular pay (excluding bonuses) for employees in Great Britain was £531 per week before tax and other deductions from pay – up from £510 per week a year earlier. Average totals pay (including bonuses) for employees in Great Britain was £562 per week before tax and other deductions from pay – up from £543 per week a… read more

Macro Factors – Costs, Prices and Margins

Sterling’s trade weighted index dipped marginally in December, down 0.3% on the previous month as Brexit uncertainty and rising coronavirus cases impacted the index. In terms of exchange rates, the £/$ rate is currently around 1.36, while £/€ rose to around 1.12. Both commodity indexes we track appreciated in January. Indeed, the Thomson Reuters CRB Index fell by 3.9% year -on -year from -11.9% in December, compared to a 17.6% annual fall for the GSCI Commodities benchmark. The rise was driven by expectations of strong international demand during 2021, particularly from… read more

Factory gate inflation (output) slowed in December, rising to -0.4% year-on-year from -0.6% in November. On a month-on-month basis, output inflation rose by 0.3%, unchanged from the previous month. Two product groups provided a negative contribution to the annual output inflation rate in December. Indeed, Petroleum provided the largest downward contribution of 1.53 percentage points (pp) to the annual output rate, with inflation falling by 26.6% year-on-year, driven by refined petroleum products. Paper and printing products displayed the second-largest downward… read more

Food remains strong in December