Close Menu

UK consumer confidence remains fragile

Consumer confidence remains fragile across the UK grocery markets, retail analysts have warned, despite the stoicism of the public in the face of Brexit uncertainty and political indecision.

Young man with a shopping cart is in a supermarket picking up wine.

In a note issued today, Shore Capital analyst Clive Black, Darren Shirley and Greg Lawless said trading had been muted but not “especially weak” in recent weeks and was expected to continued into the second quarter of the year.

“Consumer confidence remains fragile and the wider British political circus does little to raise the consumers’ mood,” they noted.

The ”more sedate” trading momentum went hand-in-hand with a continuation of a broadly rational pricing environment and a focus upon reducing operating expenses and the tight management of cash flows.” he said.

This marked an improvement on the mood throughout the autumn, they said, which had been improved by a stronger than expected Christmas. However, the second quarter of this year is likely to suffer when compared with last year’s trading, which was boosted by the later Spring heat wave, a royal wedding in May and the early success of the England team in the World Cup/

“Against the tough comparative backdrop we expect underlying trading for the British supermarkets to be tougher in Q2 and Q3, before much more favourable comparatives come in to play in Q4 CY2019,” the trio wrote.

The team added that the UK grocery scene remained “highly competitive”, with robust growth from the discounters which were still opening stores, albeit at a slower rate.

Retail outlook

Meanwhile data published by Kantar this week showed year-on-year sales growth across the grocery market of 1.4% in the 12 weeks to 24 March, as Asda overtook Sainsbury’s to become the second largest retailer in the UK with a 15.4% market share.

Sainsbury’s however remained in the number two spot for pure food and drink sales with its Taste the Difference booze range contributing to strong own-label sales.

Meanwhile the discounters continued their ascent, with Aldi seeing sales up 10.6%, taking its market share to 8%. More households shopped there than in Morrisons, head of retail and consumer insight Fraser McKevitt said, who also noted that London as its fastest-growing region.

Lidl also saw strong growth, with sales up 5.8%, providing a 0.3 percentage point boost in its market share, to 5.6%.

The Coop also saw growth of 6.5%, with its market share now 6.1% and Waitrose’s 1.3% growth was its strongest performance since last August.

Tesco’s growth was more muted at 0.5%, with sales of £138m in the period as its promotional activity reached 40%, 90 percentage points above the average 31%.

It looks like you're in Asia, would you like to be redirected to the Drinks Business Asia edition?

Yes, take me to the Asia edition No