Figures from Kantar WorldPanel show a sharp fall in price inflation at Britain’s grocers. They’re having to compete hard for business.
Morrisons gave both the bulls and the bears some meat to chew on with its Christmas trading update.
The first of the traditional big guns to report turned in like-for-like retail sales growth of 0.6 per cent for the nine weeks to 6 January.
CEO David Potts’ cheerleaders could point to the fact that this year’s Christmas was the fourth in a row in which the group recorded growth, and that it was (marginally) ahead of the City’s forecasts.
Bears noted that including the wholesale arm, which supplies products to convenience stores and Amazon, the figure landed at 3.6 per cent and that was a little shy of analysts’ forecasts even if it was better than a year ago.
They also pointed out that growth at the stores was markedly slower than last year.
So overall, the trading update was a bit of a mixed basket. But it basically showed that Morrisons is holding its own.
That counts as a win in the current retail climate, even though the supermarkets have been weathering it a lot better than most sectors, a fact that was underlined by the industry wide data produced by Kantar WorldPanel.
It put the sector’s overall sales at £29.3bn for the 12 weeks to 30 December. Like Morrisons, they were better than last year, but not by much.
Kantar’s figures also underlined the continued strength of the German pair Aldi and Lidl.
Competing with those two is an ongoing challenge for all the big players.
Potts gushed about consumer satisfaction and how friendly his staff are in his statement. To be sure, that’s welcome. But most shoppers would trade smiles for extra change in their pockets. Price is king and Potts knows it.
The noise about the price cuts the Morrisons has offered up in recent days might be a bit overdone – it’s par for the course at this time of year.
But they were also necessary to keep the growth engine running. Morrisons and its peers have had to respond to the welcome German invasion.
A notable feature of the Kantar numbers is that grocery price inflation fell to just 1.3 per cent from 3.6 per cent over the same period in 2017.
One of the main reasons for that is that supermarkets are having to compete aggressively with each other to keep hold of their customers.
That’s good news for consumers who’ve been feeling the pinch, but it leaves investors shivering in the frozen food section.
Morrisons reassured its shareholders that it will meet profit expectations. But they’d still be wise to take advantage of the coasts on sale in the clothes aisle.