A gradual shift to pre-pandemic shopping behaviour has delivered a boost to the UK’s convenience store market, according to the latest monthly data from NielsenIQ.
Grocery spending at c-stores increased by 3.3% in the four weeks ended 11 September, outperforming the growth at UK supermarkets, which rose by 0.6% during the same period.
Nielsen said the move towards the convenience channel was a result of “a gradual return of pre-pandemic consumer habits” as workers slowly return to offices, children go back to school and there was less of a need to plan ahead for a big shop.
Visits to all stores were up 10% compared with last year, the data showed. However, visits are still down 6% compared with 2019, showing there is still headroom for growth at stores.
The online share of sales remains steady at 12.4%, slightly down compared with the same period (13%) last year with the trend towards smaller online baskets.
NielsenIQ dded that shopper sentiment also appeared to be “upbeat” as total till grocery sales for the four weeks rose 1.8% year on year – an improvement from 1.1% in August 2021 and a 7.3% growth in sales against 2019.
Meanwhile, shoppers spent £9.8bn at the major supermarkets in the past four weeks, which is £526m more than the same period in 2019 (+6%) indicating robust food retail spend for the end of the third quarter despite the hospitality industry reopening.
Consumers were now returning to old shopping habits, which included ‘shopping around’, with all UK supermarkets experiencing a jump in new shoppers over the past 12 weeks.
Tesco continued to gain overall market share (26.9% compared with 26.7% a year ago), with sales up 1.4%. M&S grew sales by 7.4%, while Aldi improved by 9.2% and Lidl remained the fastest-growing retailer with sales up 15%.
Mike Watkins, NielsenIQ UK head of retailer and business insight, said: “UK shopping habits are shifting once again, this time towards convenience channels as Brits return to more impulsive shopping behaviours that correspond with a return to pre-pandemic lifestyles.
“The warm weather in early September also helped. However, there remain some clouds on the horizon as rising energy costs and inflation could hit disposable incomes, whilst availability concerns could present challenges. However, grocers can still expect to look forward to a short-term boost as some of the incremental spend has not yet returned to the hospitality channels, and shoppers are likely to plan in advance if household budgets are more constrained.”
Watkins added that retailers and manufacturers faced three challenges head of ‘the golden quarter’ of Christmas trading. “The first is to encourage bigger spends on every shopping trip now that habits are shifting away from a big shop online and towards new, and smaller missions at stores.
“The second is having inspiring media campaigns in October that help to build spend for the festive period and for the big Christmas shop. Finally, grocers must prepare for the tightening of budgets later in the year, which means ranges and pricing must reflect this in order to resonate with price conscious consumers.”
Catering giant Compass is recovering faster than expected as its financial year draws to a close.
The group said in a pre-close trading update that revenues in the fourth quarter of the year ended 30 September are expected to improve to about 86% of 2019 levels – slightly ahead of guidance of 80-85%.
For the full years, turnover is expected to be 76% of the pre-pandemic results.
The outperformance was led by sports & leisure with improved attendance, particularly for outdoor sports, and strong per capita spend. The healthcare and defence, offshore & remote sectors had been resilient throughout the pandemic and continued to trade above 100% of 2019 revenues during the period, Compass said.
Since the start of September, the return to education has been strong with high on campus spending, while trading in business & industry was in line with “cautious” expectations.
The group’s underlying operating margin in the fourth quarter is expected to be around the mid-point of the guidance range of 5.5% to 6% as the group continued to manage mobilisation costs and inflation while adapting operations according to clients’ changing requirements.
For the full year 2021, underlying operating margin is expected to be 4.4%.
“We continue to be encouraged by the ongoing growth opportunities including strong momentum in new business wins, from the acceleration in first-time outsourcing, and increased potential for market share gains,” the group added.
“Looking ahead to the start of the new financial year, most of our sectors are expected to continue performing well; although we remain cautious about Business & Industry given continued uncertainty over the pace of office reopening in our major markets.”
Compass warned the recovery was unlikely to be linear and would depend on a number of factors such as vaccination and infection rates, as well as any further restrictions put in place by governments.
“Overall, we are excited about the significant structural market opportunities globally, the potential for further revenue and profit growth, and shareholder returns over time. We will provide a further update on trading performance at our full year results on 23 November 2021 when we intend to provide further financial guidance.”
Shares in Compass fell 0.5% to 1,479.5p this morning.
Sales and profits have risen above pre-Covid levels at Real Good Food as the remaining cake decoration business enjoyed a good start to the new financial year.
The beleaguered firm, which has suffered from accounting scandals, profit warnings, management shake-ups and tumbling share price in recent years, sold its snack bar business Brighter Foods to The Hut Group in May for £43m leaving just the cake decoration division, trading under the Renshaw and Rainbow Dust brands, in the group.
Real Good Food also confirmed plans to delist the business from London’s AIM market in a bid to save costs.
Revenues in the year ended 31 March decreased 9.5% to £37.3m, with adjusted underlying EBITDA of £200k compared with a £1.6m loss in the prior year.
Pre-tax losses also shortened from £23.1m to £6.1m as the business significantly reduced central costs.
Net debt at Real Good Food also reduced significantly to £48.8m thanks to the sale of Brighter Foods.
Real Good Food said that revenues and profits for the new financial year were in line with board expectations and trading in the first five months was ahead of pre-pandemic levels, with good retail and international sales.
Executive chairman Mike Holt added: “Much has happened since 31 March 2020 in terms of making progress and restoring shareholder value. The Group has coped with the challenges of covid and has continued to improve underlying profitability. In addition, the debt burden was halved following the successful sale of Brighter Foods. Renshaw and Rainbow Dust Colours, our two remaining businesses, continue to improve their performance, and after a good start to the year, prospects are encouraging.”
Shares in the group plunged 11.7% to 3p this morning on the back of the delisting plans.
The FTSE 100 bounced back from yesterday’s losses this morning, with the index jumping 0.9% to 6,966.08pts.
Early risers this morning included McBride, up 3.8% to 81.4p, Bakkavor Group, up 3.1% to 130.9p, and WH Smith, up 3.3% to 1,727p.5p.
Science in Sport, Nichols, Naked Wines and SSP Group were among the fallers.
Yesterday in the City
The FTSE 100 suffered from a global sell-off fueled by fears at a Chinese property giant. The London index fell 0.8% to 6,907pts yesterday.
Shares in Finsbury Food Group increased 1.1% to 96.1p despite it warning about challenges of rising costs. The bakery firm reported a recovery in full-year revenues and profits as lockdown restrictions eased.
Elsewhere, risers included McBride, up 2% to 79.5p, Unilever, up 1.9% to 3,993p, Kerry Group, up 1.5% to €121.75, and Tate & Lyle, up 1.3% to 681.8p.
Naked Wines shares nosedived 12.5% to 723p following a downgrade from analysts at Liberum, while The Hut Group fell 7% to 554p and Cranswick was down 3.8% as the pig producer was hit by the CO2 shortage.