Grocery sales fall more than 7% as inflation bites

Big reduction in special offers as supermarkets seek to contain impact of price hikes

The impact of spiralling inflation is laid bare in the latest raft of grocery figures for the Republic, with sales falling more than 7 per cent in just three months and supermarkets significantly reducing the special offers on their shelves in an attempt to offset rising prices.

Sales of pasta and flour “soared” since the start of last month as consumers stocked up amid reports of dramatic price increases and potential shortages in these staples.

The latest take-home grocery figures from retail analyst Kantar show that Irish supermarket sales fell 7.3 per cent in the 12 weeks to March 20th with shoppers spending €78.2 million less on take-home groceries.

The end of Covid-19 restrictions coupled with grocery price inflation of 3.7 per cent – the highest level since October 2013 – were behind the decline in sales, Kantar said.

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“All our remaining Covid-19 restrictions have eased across Ireland, and that’s making its mark on grocery sales,” company spokeswoman Emer Healy said. “Not only are people heading back to the office, but they’re also enjoying returning to pubs, cafes and restaurants, and as a result are picking up more food while on the go, rather than from the supermarkets.”

She noted that, as spiralling costs “bite at the heels of retailers and shoppers, supermarket prices are being pushed up”.

The number of products sold on promotion has dropped by 5.7 per cent as retailers “look to mitigate supply chain pressures, and we’ve seen a marked increase in the average price of staples like bread, butter and toilet paper over the past 12 weeks”, she continued.

Inflation, rather than the pandemic, is now the main driver of changes to consumer behaviour in Ireland, according to the Kantar assessment.

“This is a stressful time for consumers, and that anxiety is being felt on the shop floor. With promotions down, shoppers are focused on seeking out the cheaper alternatives. Private labels’ share of the grocery market is on the rise and has grown by 1.2 per cent since last year. Retailers’ own lines now account for 46 per cent of total grocery sales,” Ms Healy said.

Lockdown

She suggested headlines around shortages of pasta and flour had also seen sales of those products soar, with both categories boosted by 22 per cent and 30 per cent respectively during the month of March.

This latest data period also marks two years since the first lockdown.

“It’s becoming clearer which pandemic grocery habits are here to stay,” Ms Healy said. “The growth of online shopping has been one of the most staggering shifts to shopper behaviour in recent memory, with all retailers now offering some form of online shopping.”

Since 2018, the online share of the market has grown by 3.1 percentage points, a boost largely driven by couples without children who are natural converts to online technology.

Sales of home baking and home cooking ingredients continue to see strong growth, up 14.6 per cent and 20 per cent respectively since 2019. Tea and coffee are another good example. Hybrid working means sales of hot beverages shot up by 23 per cent over the latest period compared with before the pandemic.

Dunnes retains its position as Ireland’s largest grocer and holds a 22.4 per cent market share this period. SuperValu has pipped Tesco to second place, with the retailers claiming a market share of 21.6 per cent and 21.3 per cent respectively. Lidl follows behind with a 13 per cent share of the market, while Aldi holds 12.4 per cent.

Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor