Christmas 2019 ROI Grocery

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The data from Kantar World Panel, for 12 weeks to 29th December 2019, places Dunnes Stores in top position with 23.6% of the ROI grocery market. Dunnes have been consistently gaining market share, year on year, since back in P3 and it is their 16th consecutive period in the top slot. 23.6% is a full 2.0% more than their share 6 periods ago when they achieved 21.6% for 12 w/e 11/08/19. This is a phenomenal end to the year. 

Tesco have moved to 2nd position at 22.0%, which is down -0.3% share versus last year. SuperValu are in 3rd place, all steady at 21.8% which is unchanged year on year.  As in previous years, combined multiple supermarkets gain share in the Christmas trading period, moving up by 2.6% from 64.8% for 12 w/e 06/10 to 67.4% for 12 w/e 29/12. This demonstrates seasonality, the ebb and flow of two shopping philosophies, since the multiples gained 2.1% in the same time period last year also.

The gain comes largely at the expense of the discounters whose combined share fell -2.3% from 24.5% to 22.2% in the same period. But we see the same overall trend every year i.e. big supermarkets gain at Christmas whilst discounters traditionally peak at Halloween and decline at Christmas - but kick on strongly when many customers are watching the pennies in January.   

Dunnes Stores

Dunnes’ market share trend line has looked somewhat like a ‘Sine Wave’ since the introduction of vouchering in early 2015. There’s definitely a pattern of peaking at Christmas and dipping in summer. However, the long-term trend is still upward. 

Dunnes’ Christmas performance is really a continuation of their trajectory over the last year. They are benefitting greatly from a revitalised store estate, new store openings/refits in Naas and Ilac Centre, continuous improvement of their private label ranges and the now famous €10 off €50 voucher mechanic. Like last year, the voucher mechanic had an added boost this Christmas following the distribution of a free ‘starter voucher’ via the Sunday Independent in mid-November. This undoubtedly brought in new customers, some of whom will have switched their Christmas shop to Dunnes. My own research found that 54% of main Christmas grocery shopping transactions included a voucher. Where Dunnes was the main shop, 90% of shoppers used a voucher, many combining the €10 off €50 till receipt vouchers with Value Club mail-out vouchers. There are three additional dimensions to the Dunnes performance. 

1.      Firstly, they didn’t depend solely on the vouchers to deliver ‘value’. This year, they up-weighted their promotional offers and extended their shopping hours with four stores operating 24 hour trading around 22nd & 23rd December.

2.      Secondly, no retailer can grow sales or market share without having sufficient stock to sell on key items. This sounds simple, but can get over-looked. Dunnes appear to have positioned their stock levels to maximise sales this Christmas. Sometimes this led to apparent over-stocks such as fresh turkeys but it was probably worth the risk, just to make sure they capture every last cent of shopping opportunity before closing time on 24th December. 

3.      Finally, Dunnes’ advertising seems to have really resonated with customers this year. It was the second year for Dunnes to run the ‘Make Christmas Special’ TV advert, but my survey showed that it was the most liked of the Christmas supermarkets ads.

Tesco

Like Dunnes, Tesco’s performance was a continuation of trend. They’ve been bobbing between second and third place since they stopped accepting competitor coupons in July ‘18. They’re share was down -0.3% year on year but I think they’ll be satisfied with this for several reasons.              

1. They traded Christmas without the Douglas Shopping Centre store. Previously we had reckoned that this was worth up to 0.3% share.
2. They distributed €10 off €45 coupons via the press during December ’18. This years performance was unaided by any press-based couponing. Apart from the normal Tesco Clubcard mail-out, it was all real money that went in the till and the market share data is not being hugely skewed by vouchers.
3. They had a nice clean exit from Christmas without any obvious overstocks and set themselves up for a strong 2020. It was interesting that the only significant over-stock I saw was in Christmas wrapping paper and Christmas crackers which likely reflected the trend toward environmentally conscious consumers buying less unnecessary packaging. My research showed that 26% of shoppers purchased less single-use plastics in 2019 versus 2018. Perhaps crackers and wrapping paper are being caught in this trend?

Their average selling price is well below that of Dunnes and SuperValu so their share of volume i.e. packs sold, is much stronger than the 22.0% value share suggests.

SuperValu

SuperValu have had a tough time in the last few years. Grocery market share had been in continuous decline but they have worked hard to halt this in H2 of 2019. A combination of heavy advertising, private label price cuts and 48hr deep-cut special offers appears to have changed the trend line. As a result, SuperValu sales grew by 1.4% in the 12 weeks to 29th December. It will be important to the Musgrave group that SuperValu sustain this performance but they will be comforted by the fact that their most innovative work is being done in food to go and convenience channels, areas that the Kantar data does not measure very effectively.

Lidl

Lidl had a good Christmas, gaining 0.4% share year on year. However, at 10.9% their share is still lower than Aldi’s 11.3% despite having more stores. I think they are missing some key Christmas product opportunities at key times. For example, when I visit Lidl stores in the week before Christmas I can never find a 6pk of standard tier Mince Pies. It was interesting to see Lidl follow Aldi’s Kevin the Carrot character merchandising lead by introducing their ‘elf on the shelf’ characters. The mischievous elf family (Nick, Holly, Eve and Eddie) formed the main spine of the TV ad campaign, also featuring on in-store POS and being available for sales as toys. Like Aldi they have invested in new stores this year and the long-term trend is upward but they could be getting more from the market at Christmas.

Aldi

Aldi had a fantastic Christmas, growing sales by 6.3% and achieving their best ever seasonal market share of 11.3%. Like Dunnes, this is a continuation of the recent trends. They’re simply getting most things right. Their store estate is receiving a very effective ‘Project Fresh’ make-over and they are still opening new stores. Crucially, their range development has been very impressive. They have grown in confidence and ambition and launched their best ever seasonal range. This is a limited range discounter, but they had seven different kinds of mince pie and were right on-trend with vegan Christmas meal solutions and artisan Gins! My research showed that whilst 86% of households still had Turkey for their Christmas lunch, 6% also bought a vegan/vegetarian option so Aldi are not hesitating to jump on emerging trends.      

It was Aldi’s fresh meat and seafood ranges that really stood out for me though with products like scallops in shells, organic bronze turkeys and butterfly lamb shoulders. Similar to Dunnes, their stock levels were ambitious so they were set up to win Christmas. And they have established a very effective ‘Winter Sale’ to turn over-stocks into an ‘event’ to rapidly clear seasonal stock.

Northern Ireland Shopping

‘Others’ are down -1.1% year on year, partly reflecting decreased cross-border shopping. The €/￡ rate was around 1.18 during December ’19 versus 1.10 in December ’18 which will have discouraged some of the cross-border shopping seen in previous years, despite cheaper diesel prices. My research showed that for those that did travel north, 83% were on a mission to buy cheaper alcohol. It will be interesting to see how Brexit impacts cross-border shopping for Christmas 2020.

Sustainability

Consumers have been receiving a constant flow of messages around sustainability over the last few years. And retailers have been getting more vocal about what they are doing to help tackle the climate crisis. However, it is a time of transition. In my research I found that 23% of people didn’t think about sustainability, health or community when doing their Christmas shopping. For them, Christmas is a time to indulge, regardless of the consequences. Interestingly though, 26% said they had bought less single use plastics in Christmas ’19 versus the previous year. Even more marked was that 36% of people tried to buy less food generally, so as to reduce in-home food waste. And 22% of people had consumed less alcohol year on year, with 20% feeling they had made healthier food choices. Sustainability is not just about plastics in the oceans, and it will be interesting to see how issues like health, waste and conscious consumption develop over the next year.

Malachy O’Connor

• Retail Industry Consultant & Director at Food First Consulting www.foodfirstconsulting.ie
• Partner at International Private Label Consult www.iplc-europe.com