Supermarkets are ramping up promotional deals to lure in cost-conscious shoppers ahead of Christmas, according to figures published on Tuesday.
Grocery price inflation slowed to 4.7 per cent in October, down from 5.3 per cent in September, as consumers bought more items on offer.
Just under 30 per cent of grocery spending was on promoted items last month, data from Wordpanel by Numerator showed.
Spending by consumers on promotions at supermarkets jumped 9.4 per cent in October, while spending on full-priced items increased by just 1.8 per cent.
Sugar confectionary, dog food and household paper prices fell at the fastest pace, while chocolate, fresh meat and coffee prices continued to rise rapidly.
Fraser McKevitt, head of retail and consumer insight at Wordpanel, said: ‘Retailers are very alive to the financial struggles that some households are facing, not least ahead of this year’s Budget.
Deal hunters: Shopper spending on promotional items in supermarkets rose sharply in October
‘They’re eager to show how they’re offering shoppers value for money, putting the emphasis on price cuts rather than multibuy offers.’
McKevitt expects the proportion of spending on promotional offers at supermarkets to rise in the coming weeks.
While consumers are attracted to price cuts and deals, spending on supermarket premium lines continued to grow in October as shoppers treated themselves from time to time.
Wordpanel said it expected sales on retailers’ premium own-lines to hit £1billion for the first time in December.
Online remained the fastest growing element of the grocery market in October, with spending on home deliveries rising by 11 per cent.
McKevitt said: ‘On average, households who use online grocery now buy three shops a month, making up a whopping 61 per cent of their spending at the grocers.’
Separate research by Barclays on Tuesday revealed that two-thirds of Britons have noticed festive food and drink products, such as biscuit tins and chocolate tubs, being affected by ‘shrinkflation’, despite costing more or the same.
Nearly 60 per cent of consumers said they believed festive items were more expensive this year compared to a year ago.
Ocado fastest growing grocer again
In Wordpanel’s latest findings, Ocado was crowned the fastest growing grocer for the third consecutive month.
Ocado enjoyed a new record market share for the 12 weeks to 2 November, hitting 2.1 per cent, Wordpanel said.
At 15.9 per cent, Ocado registered its highest rate of sales growth in over four years since April 2021.
Tesco and Lidl both added half a percentage point of share to their market share position. Both enjoyed the largest market share gains compared to data from a year ago.
Maintaining a run of double-digit growth from April, Lidl boosted sales by 10.8 per cent over the 12 weeks, taking its market share to 8.2 per cent.
Tesco accounted for 28.2 per cent of the market as spending at Britain’s biggest grocer jumped 5.9 per cent. Sales growth of 5.2 per cent took Sainsbury’s market share to 15.7 per cent.
Growth: Ocado was crowned the fastest growing grocer for the third consecutive month
With 10.6 per cent of the market, Aldi also won share and grew sales by 4.4 per cent.
Spending at Iceland rose by 4.9 per cent, putting it ahead of the market rate. It has a market share of 2.3 per cent, up 0.1 percentage points on 2024.
Spending at Morrisons nudged up by 2.3 per cent, with the grocer’s market share standing at 8.3 per cent.
Waitrose’s sales rose 3.8 per cent, giving it a share of 4.4 per cent. Convenience retailer Co-op holds 5.4 per cent of the market, while Asda took 11.6 per cent. Asda’s market share fell 3.9 per cent from a year ago as it battles to turn its fortunes around.
Looking across the wider high street, grocery sales at M&S over the 12 weeks increased at the fastest rate since June at 8.8 per cent higher than a year ago.
Consumer spending cooled last month
Consumer spending eased last month as shoppers waited for Black Friday deals and the Autumn Budget, where tax rises are expected.
Barclays said spending on its credit and debit cards fell 0.8 per cent in the year to October as expenditure on essentials contracted sharply.
A separate survey from the British Retail Consortium trade body showed sales at retailers rose 1.6 per cent year-on-year in October, representing the weakest growth since May.
Non-food sales increased by 0.1 per cent year-on-year in October, against a decline of 1.1 per cent in October 2024. This was below the 12-month average growth of 1 per cent.
Spending habits: Consumer spending eased last month as shoppers waited for Black Friday deals and the Autumn Budget, Barclays said
‘Consumers and businesses alike appear to have adopted a “wait and see” approach ahead of the Autumn Budget’, Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management, said.
He added: ‘While this is generating some short-term headwinds, it could position the UK economy for a rebound once the uncertainty lifts, potentially setting the stage for a strong festive season.’
A survey of 2,000 consumers published by Barclays showed one in three consumers was holding off from making major purchase decisions until the after the Autumn Budget.
All seven of Barclays’ standard measures of consumer and economic confidence declined for the first time since August 2022 last month.
Helen Dickinson, chief executive at the BRC, said: ‘Retailers are counting on Black Friday to deliver a vital boost, but looming Budget decisions risk undermining fragile consumer confidence.
‘With demand weak and business rates unresolved, retailers face hard choices on investment and recruitment.’
She added: ‘A business rates surtax on retail would put major stores and thousands of jobs at risk. The Chancellor should use the Budget to remove this threat and help curb inflation for businesses and families.’
Analysts at Shore Capital, said: ‘The consumers’ mood remains weak, in the doldrums, not aided by a late Budget and the Government’s learning the job on approach, the stuff of amateurs.
‘Black Friday comes amidst the tax rising Budget; the trade will be hoping folks see-through Reeves et al and focus on Santa.’
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