City Snapshot: Shoppers Cut Supermarket Spending to Tackle Cost of Living Crisis | New

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Shoppers limited their spending in supermarkets after the end of the summer holidays, with £400million less flowing through checkouts as consumers worried about soaring energy bills and rising food prices food, according to a new study this morning.

Overall UK crate sales growth slowed from 4.5% last month to 2.5% in the four weeks to September 10 as shoppers reset their spending habits to cope with the cost of living crisis.

Data from NielsenIQ showed supermarket sales fell to £2.5billion in the week of September 10 – the lowest level this year since the week’s lull after Easter – which means £400m less was being spent in supermarkets as shoppers restricted their spending in early autumn.

As the cost of household bills jumped, volumes also fell -4.4% at mults over the past 12 weeks.

Lidl remained the fastest growing retailer in the UK as basket sizes shrank and shoppers started buying less and more often to manage rising grocery bills, Nielsen said.

Lidl’s sales have increased by 9.4% over the past 12 weeks.

This follows news last week that Aldi had increased its market share to take away Morrisons’ place as Britain’s fourth largest supermarket and a report in The Grocer that Aldi was also taking sales away from Lidl .

Nielsen said the co-op (+6.9%) followed Lidl in terms of fastest growth over the period, with Marks & Spencer (5.5%) and Iceland (5.5%) also registering increases. increases. Asda (5%) was the fastest growing retailer among the ‘big four’, while sales at Morrisons and Waitrose continued to fall. Aldi’s growth was 3.7%.

Mike Watkins, NielsenIQ UK’s head of retail and market intelligence, said: “Asda’s sales have rebounded strongly in recent weeks, helped by weak sales last year, but the retailer has also attracted new buyers. .

“This suggests that new range initiatives such as Just Essentials and the roll-out of Asda Rewards are giving better price perception and are now starting to impact sales.”

Promotional spending also continued to stagnate, accounting for just 20.9% of all sales in the period – a slight increase from 19.9% ​​last year.

In-store visits are up 4.8% over the past four weeks, while online visits are down 5.3%. This equates to one million fewer online deliveries than the same period last year, with online sales down 7% compared to the same period last year.

The data also showed fmcg’s online share of sales declined to 11.1% from 11.3% last month and 12.3% a year ago, with online share normalizing after the peaks of the pandemic.

Pet & petcare was the fastest growing category over the four weeks with value growth of +12.7%. At the same time, the value of non-alcoholic beverages also rose sharply (+11%). This category is also the only fmcg category to experience volume growth (+4.5%).

However, food inflation continued to support the growth in value of dairy products (+9.3%) and bakery (+6.9%). The value of sales fell in beers, wines and spirits (-4.5%), fresh produce (-2.3%) and confectionery (-2%).

Watkins added: “With food prices continuing to rise and household energy costs set to jump in October, it’s no surprise that our data shows that 57% of consumers say they have been severely or moderately affected by the cost of living crisis, and within three months that figure is expected to rise to 76%.

“With CPI inflation expected to remain close to current levels for the remainder of the year, this will encourage households to shop around and seek savings at various retailers as shoppers increasingly focus on cost. from their weekly errands to help manage their personal finances.”

morning update

Business real estate investor LXi REIT confirmed to be in talks with Sainsbury’s to buy a portfolio of stores from the supermarket chain for around £500million in a sale-leaseback deal.

The 18-store estate is mainly located in the south of England and will be re-let to Sainsbury’s if a deal is struck.

LXi said in a statement to the London Stock Exchange this morning in response to a Sky News report that it would seek to fund the purchase through a mix of new equity and debt.

The investor is discussing a capital raise with potential investors, but added that no binding terms have yet been agreed with Sainsbury’s.

“There can be no certainty that the acquisition, or the associated capital increase, will take place,” the statement said.

“A further announcement will be made if and when appropriate.”

LXi added that the store portfolio benefits from several defensive characteristics, including “strong commercial performance, very low and sustainable indexed rents, long-term ‘green’ leases, low site coverage and modern buildings that offer a omnichannel sales option”.

Supermarket Income REIT praised the strength and resilience of the grocery sector by unveiling “another set of strong annual results”.

The group, which invests in supermarket assets, revealed a 34% rise to £77.6m in its annualized walk-in rent and a 35% rise in pre-tax profits to £110.3m during the year ended June 30.

Its net assets grew by 64% during the period to £1.4bn, with a direct portfolio valued at £1.6bn, a year-on-year increase of 423 £.2 million.

The investor added 12 supermarkets to the portfolio during the year at a combined price of £381m, with five other assets bought for £216.1m since the end of the year.

Chairman Nick Hewson said: “It was another year of significant growth and in which we achieved significant milestones by being added to the premium segment of the London Stock Exchange and the FTSE 250 Index.”

He added: “At a time of considerable unpredictability and uncertainty, particularly for our economy, we believe that our portfolio of focused, sector-specific real estate assets will continue to generate stable, long-term and growing revenues. for our shareholders.”

Tesco appointed Caroline Silver to its board of directors as a non-executive director, effective October 1.

Silver, who is currently chairman of PZ Cussons, will also join the group’s audit committee.

In addition to her role at PZ Cussons, she is also a non-executive director of Bupa and The Intercontinental Exchange.

Previously, she was a trustee of the Victoria and Albert Museum, a non-executive director of Meggitt and M&G, and a board member of the London Ambulance Service NHS Trust.

Silver also spent over 30 years in the investment banking industry and was most recently a partner and managing director at Moelis & Company. Previously, she held senior positions in corporate finance and mergers and acquisitions at Morgan Stanley and Merrill Lynch after starting her career at PricewaterhouseCoopers, where she obtained her chartered accountancy qualification.

President John Allan said:[Caroline’s] His wealth of experience in a number of commercial, financial and governance roles, as well as his experience in investment banking and internationally, will no doubt bring additional valuable knowledge and perspective to the Board.

Grocery tech company Eagle eye solutions showed a “good performance” in its last financial year by winning a multitude of new contracts and strengthening ties with existing customers.

Group revenue jumped 39% to £31.7m in the year to June 30, while adjusted EBITDA jumped 54% to £6.5m and pre-tax profits fell from £100,000 to £700,000 in the prior period.

New customers won during the year included two in the US and Halfords in the UK and Eagle Eye said there had been a “strong” increase in interest in its loyalty offers from from Asda, Pret a Manger and Pizza Express as they sought to build consumer loyalty.

CEO Tim Mason said he was “incredibly proud” of the successes achieved in a difficult economic environment.

“In today’s tough economy, customer loyalty and effective promotions are more important than ever. The retail industry is increasingly aware that personalized, data-driven promotions are one of the most effective ways to drive commerce. The ability of our AIR platform to deliver 1:1, real-time, enterprise-wide marketing means we are well positioned to meet this growing customer need.

“Eagle Eye’s outlook is increasingly positive and we entered FY23 in a very strong position with considerable momentum across the business.”

The FTSE100 opened 0.3% higher at 7,212.26 points this morning.

Shares of LXi REIT rose 0.6% to 139.4p on this morning’s news, while Sainsbury’s jumped 1.5% to 197.2p and Tesco rose 1.6% to 227.7p.

Fellow property investor also saw its value jump 1.8% to 116p on strong results and Eagle Eye Solutions rose 2.6% to 567p.

Other risers included Kerry Group, up 2.1% to €94.62, Science in Sport, up 2% to 26p, McBride, up 1.6% to 24.8p, ​​and C&C Group, up 1.4% to 156.2p.

Fallers so far included Virgin Wines UK, down 7.2% to 45p, Delivery Hero, down 3.3% to €41.48, and Just Eat Takeaway, down 2.8% at 1,347p.

Yesterday in the city

The FTSE 100 closed 0.6% lower at 7,191.63 points after the bank holiday weekend as the City awaits an expected interest rate hike this week.

Haleon shares rose 2.6% to 266.1p after the group posted strong first-half sales and profit growth in its financial results as a listed company. The stock remains down from the 330p price at which it started trading in July.

Other risers included Bakkavor, up 2% to 90p, Kerry Group, up 1.9% to €95.58, McBride, up 1.7% to 24.4p, and Nichols, in up 1.7% to 1,077.5p.

Ocado led the fallers following a downgrade from HSBC, falling a further 9.4% to 608p following a series of bearish results last week showing weaker demand from buyers. HSBC analysts downgraded the stock to ‘cut’ and set a target price of 575p. Shares of the online grocer are down 61% so far in 2022.

Just Eat Takeaway, THG, Deliveroo and Science in Sport were also among the day’s losers, slipping 7% to 1,386.8p, 6% to 40.5p, 6.4% to 90.6p and 4.2% at 25.9p.

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