UK consumer uncertainty tipped to continue after worst Christmas trading for British supermarkets in five years

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British supermarkets experienced the lowest growth over the key Christmas period since 2014, with sales growing by just 0.5% year-on-year in the four weeks to December 28, according to industry data.

Market researcher Nielsen attributed the weak growth to increased competition, price cuts and lower inflation.

Its data also revealed that while consumers visited supermarkets more often over the 2019 Christmas period, shoppers purchased fewer items and spent less each time.

Nielsen said Sainsbury’s, Britain’s number two grocer, was the most successful of the big four supermarket groups over the 12 week period to December 28, though it still experienced a sales decline of 0.4%.

Market leader Tesco, Walmart-owned Asda, the number three player, and number four Morrisons trailed with sales falls of 0.9%, 1.1% and 2.5% respectively.

German-owned discounters Aldi and Lidl continued to outperform and win market share from the big four. Lidl’s sales rose 12.2%, while Aldi’s were up 7.7%, giving a combined market share of 15.1%.

Rival market researcher Kantar will also publish data for UK grocers’ Christmas performance on Tuesday.

The consumer uncertainty will persist in Britain’s grocery market until the terms of Britain’s exit from the EU become clearer, the boss of Morrisons said.

“I think there’s going to be uncertainty in the market until Brexit becomes clearer,” chief executive David Potts said after Morrisons reported its fall in sales over the Christmas period, blaming challenging trading conditions.

Prime Minister Boris Johnson’s sweeping election victory last month has eliminated the risk of a disruptive no-deal Brexit on January 31.

But a hit to trade remains possible at the end of 2020, when Mr Johnson insists a post-Brexit transition period will end, regardless of whether he can negotiate a trade deal with the EU before then.

Morrisons said underlying sales, excluding fuel and sales tax, fell 1.7% in the 22 weeks to January 5 - a period that included its third quarter and the nine-week Christmas trading period.

The outcome was better than feared however, with analysts forecasting a decline of 2.2% from the year earlier period, and Morrisons said it was still on track to make analysts’ full year profit forecasts.

“It was encouraging that during an unusually challenging period for sales, our execution was strong and our profitability robust,” Mr Potts said.

-Reuters