Macro pressures in the UK are likely to put the squeeze on Grocery profits for the end of the year.  With a recent warning by Tesco highlighting the impact of tighter consumer wallets, in today’s Insight Flash we do a pulse check on UK Grocers.  Subscribers can track this data as the last three months of the year play out, seeing the extent to which conditions deteriorate or whether they improve and which grocers are most impacted.

Rising inflation in the UK, especially for food, makes it unsurprising that discounters Aldi and Lidl have seen the top spend growth on both a one-year and two-year basis over the past three months.  Although a large chunk of this is due to store expansions, the continued investment speaks to the success the owners are seeing in the UK market and will put even further discounting pressure on other players.  The overall subindustry has seen spend growth of 7.8% in the last 91 days versus pre-pandemic levels three years ago, but relatively flat trends versus 2020 and 2021.

Grocery Spend Growth

Note:  91 days ending 9/28/22

Aldi commands the highest average ticket per purchase among the top Grocers in our data, which given its low pricing means that shoppers are likely using it as a stock-up destination and buying many more items per trip than at competitors. Waitrose is the only other UK grocer to have had an average ticket above £30 in the past 91 days. Market leaders Tesco and Sainsbury’s both garnered an average ticket about 20% below Aldi’s.

Average Ticket

For Tesco, size does have some advantages.  In the month of August, only one third of its customers also made a purchase at Aldi and only a quarter also shopped at Lidl.  This low customer overlap could provide some pricing cushion, though it will be interesting to continue to track the data to see if cross-shop increases as prices continue to rise.  Tesco’s highest cross-shop currently is with Sainsbury’s, where 44% of its customers also shopped in August.