Grocery market sees 4.2% growth but underlying sales slow

But the figures, from market analysts Nielsen, were buoyed by seasonal activity and price inflation.

Nielsen said: “These headline growths are lower than this time last year and are also down from +6.7% in January, with the impulse and convenience sector achieving sales growths of less than 2% since Christmas.”

Mike Watkins, senior manager retailer services at Nielsen, said: “Food inflation and marketing activity around seasonal events such as Valentine's and Mothering Sunday has resulted in February trading staying solid in the grocery retail sector.”

Category specific data backed this up, with inflationary gains in bakery (+12.3%) and dairy (+9.5%) driving growth alongside huge seasonal gains in snacks/confectionery (+15.3%).

Watkins added: “The early Easter will provide further opportunity for retailers to build on recent momentum but they should be aware that consumers remain cautious and that price remains very much on the agenda.

“We report a slowdown in non-food sales in the grocery multiple sector with growths here (+5.2%) behind the market average and annual average for this category (+7.3%).

“This indicates that an element of consumer prudence is occurring around non-essential, discretionary spending.”

Nielsen's total till monitor reports that Asda has gained share slightly in the last 12 weeks against the same period last year and is currently growing at 6.6% year on year.

Watkins said: “I expect Asda to have a strong Easter. In the last four weeks we have seen shopper numbers grow at Asda by over half a million compared to last year.

“The retailer's pricing message is proving effective in enticing shoppers into store and once there, shoppers are now finding a broader range of private label goods, in particular for premium and organic, which is appealing to the new shoppers.”

Share of grocery market spend by retailer
12 weeks to 23 February 2008
(Value sales % change in brackets)

Tesco 29% (+5.1%)
Asda 16.2% (+6.6%)
Sainsbury's 15.4% (+6.5%)
Morrisons 10.6% (+10.1%)
Total Co-op 5.8% (+3.2%)
Waitrose 3.7% (+6.3%)
Somerfield 3.5% (+3.3%)

Source: Nielsen Total Till, Nielsen Homescan