Nielsen predicts grocery sales to decline by £1bn in 2014

By Gemma McKenna

Published: 21 November, 2014

As grocery sales fall for the third consecutive month, Nielsen predicts 2014 will herald an overall decline from £146 billion in 2013 to £145 billion.

The news paints an increasingly gloomy picture of the grocery retail sector - earlier this week Kantar WorldPanel reported that for the first time in its 20-year history, overall grocery sales fell 0.2% in the previous 12 weeks.

Nielsen says that since it began reporting on the contracting grocery market in January this year, year-on-year sales have declined nine out of the 11 four-week reporting periods.

For the four weeks ending November 8, 2014, sales were down -0.9%¹ (in value) versus the same period a year ago. Sales volume dropped -1.2%.

"It's been a bad year for the big four supermarkets and they enter the key Christmas trading period with sales growths much weaker than 12 months ago," says Mike Watkins, Nielsen's UK head of retailer and business insight. "Much of this has been put down to the discounters, who are gaining share fast, but it's the needs and expectations of shoppers that have been changing - and some of the supermarkets simply haven't adapted quickly enough."

Nielsen projects grocery sales for Q4 2014 will be between -0.5% to -1.0% lower than a year ago, resulting in an overall decline of £1 billion. This would represent the first full year decline for over a decade.

"The peak period will again be mid-December onwards and, assuming a similar pattern to last year, consumers will be the real winners, by shopping around for the best prices and potentially using a wider range of retailers, store formats and channels than last year," predicts Watkins. "We expect online grocery sales to continue to grow significantly ahead of other channels and to account for 5% of all sales by the end of the year."

On the individual supermarkets Watkins says: "Aldi (+21%) and Lidl (+23%) are maintaining their stellar growths and look set for another increase in market share in December, together with Waitrose (+6.9%). For all three, sales growths continue to be driven by new shoppers."

Meanwhile the leading supermarkets spent 12% less, at £34.6 million, on TV and Press advertising during the four weeks ending 8 November. Tesco cut its spend by 61% to £2.9 million.

Asda, Aldi and Lidl were the three biggest spenders in the period, while Morrisons, with a spend almost a third smaller than last year, reached number four.

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