Christmas 2021: which retailers came out on top

25 January 2022

Farm business Food supply chain
Multiple logos of UK supermarkets

We take a look at key trends in the UK food retail market.

The majority of UK retailers have published their trading data covering the Christmas period. Christmas trading is a crucial time for the retail sector as it makes up a large proportion of revenue for the year.

Despite the rising number of omicron cases and the increasing number of supply chain challenges, this year’s Christmas grocery sales hit £11.7 billion over the month of December. This was only 0.2% lower than the record-breaking grocery sales in 2020.

Key grocery trends this year

  • Spending on traditional Christmas dinner items was broadly similar to last year.
  • Spending on more indulgent items saw an increase. Sales of sweet treat items such as Christmas chocolates reached £61m, a 21% increase compared to last year.
  • Rising prices pushed up shopping budgets with grocery price inflation reaching 3.5% in December, adding nearly £15 to shoppers’ average monthly grocery bill.
  • Ahead of Veganuary, plant-based foods increased in popularity with sales of chilled vegetarian ranges increasing by 6% and frozen equivalents increasing by 4% compared to last year.
  • Despite rising cases of COVID-19 shoppers returned to shopping instore during the festive period, online sales fell by 3.7% in December and instore visits hit their highest since March 2020.
  • Sprout sales were in decline by 3% (sales volume). However, they were served up in December by almost half of all UK households.

Retailers’ performance

Following record-breaking grocery sales in 2020 most retailers struggled to achieve year-on-year sales growth over the Christmas period.

According to Kantar data, the only retailers to achieve year-on-year grocery sales value growth in the four weeks up to Christmas were M&S, Lidl, Aldi and Ocado.

M&S lead the way with an increase in retail grocery sales by 7.6% (sales value) compared to last year.

To understand in more detail what is happening in the UK food retail market, we have looked at each of the individual retailers’ performances. 

In 2021 the NFU’s Food Chain team had over 60 meetings with businesses in the retail and foodservice sectors.

NFU Food Business Relationships Advisor Annabel James said: "This Christmas saw a number of challenges including the development of the omicron variant and increasing supply chain issues.

"Although some retailers struggled to achieve year-on-year growth, it was good to see the majority of retailers increase sales compared to pre-pandemic levels.

"In 2021 the NFU’s Food Chain team had over 60 meetings with businesses in the retail and foodservice sectors. Over the next year the NFU will continue to work closely with retailers to understand their plans for the upcoming year and discuss key supply chain issues on behalf of members."

Tesco achieves its highest market share since 2018

Christmas trading has remained strong for Tesco, with growth seen both online and instore.

According to Kantar, the retailer achieved its highest market share since 2018, with shares up by 0.6% over the 12 weeks to 26 December 2021. Tesco’s current market share stands at 27.9%.

A Tesco trading update put UK like-for-likes up 0.3% in the six weeks to 8 January, and up 0.2% in the 19 weeks to 8 January.

It is now expected that full year retail operating profit will be slightly above the top-end of its previous £2.5 billion, to a £2.6 billion guidance range.

Tesco’s Chief Executive Ken Murphy stated: "We are delighted that we were able to help our customers have a great Christmas.

"Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range."

Sainsburys' sales decline but strong growth 

Despite being the UK’s second-largest supermarket chain by market share, Sainsburys struggled to achieve year-on-year growth in sales over the festive period.

Total retail sales value (excluding fuel) was back by 2.9% in the six weeks to 8 January, but grocery was up slightly by 0.1% (sales value).

It was, however, positive to see strong sales growth when compared with pre-pandemic figures in 2019. Total retail sales value (excluding fuel) was up by 2.4% and grocery sales up by 6.8% (sales value).

Sainsburys made investments in value, new products and services to drive market growth.

In December, the retailer launched a campaign to match Sainsburys quality with Aldi prices on key Christmas items, such as turkey crowns, which were £6.89 a kilo. The campaign proved popular with key items selling over 20% more volume then the previous year.

During quarter three, over 600 new products were launched, of which 300 were new Christmas items. New lines in the Taste the Difference range drove growth in the premium own-label lines.

Aldi reports ‘best ever’ Christmas

This year the German discounter reported that the festive period enabled them to position as one of the UK’s fastest growing supermarkets in 2021.

Aldi announced that their sales in December rose 0.4% compared to the previous year and Kantar reported that their market share grew by 0.3% over the 12 weeks to December 2021, leaving their current market share at 7.7%.

One of Aldi’s most popular products included their Specially Selected Exquisite Chesham Bronze Turkey.

Aldi sold more than 43 million mince pies, 21 million British pigs-in-blankets and 118 million Brussels sprouts over the festive period.

Experts have stated that the return of Kevin the Carrot and their Christmas advert played a large part in Aldi’s success over the festive period as it helped to attract over half a million new customers from the big four supermarkets.

Lidl’s record footfall drives sales growth

Lidl GB saw good growth during the festive period. Overall sales grew by 2.6% year-on-year and were up by 21% compared to pre-pandemic figures.

The discounter also achieved record footfall levels in the week leading up to Christmas, with footfall up 14% year-on-year on its busiest day, 23 December 2021.

According to Kantar, Lidl grew their shares by 0.2%, leading to their current market share standing at 6.3%.

Lamb proved a popular alternative to turkey this year with sales volume up by 21% year-on-year and up 65.4% compared to pre-pandemic figures.

Christian Härtnagel, Lidl GB CEO, said: "Our high quality, low priced festive ranges proved a hit, helping us achieve a record Christmas with footfall and sales beating the previous two years.

"As inflation continues to rise, I want to reassure each and every one of our customers that we remain resolute in our promise of being the destination for the lowest grocery prices in the market."

M&S fastest growing retailer in Christmas period

M&S saw strong growth during the Christmas period. The retailer was named the fastest growing major store-based food retailer in the period.

Total retail sales were up 18.6% year-on-year in the 13 weeks to 1 January 2022. Grocery sales were up 10% and 12.4% when compared with pre-pandemic levels.

As part of its ongoing turnaround plan, M&S has worked to broaden the appeal of its food range with more products and family-orientated ranges.

A shift towards lower prices has also helped the business gain market share as people used the retailer from bigger grocery shops.

Steve Rowe, Chief Executive, said: "Trading over the Christmas period has been strong, demonstrating the continued improvements we’ve made to product and value."

Although not included in the figures reported, M&S products performed strongly on Ocado.com, representing c.30% of baskets in December.

The below retailers have not yet published results. However, we have outlined the information we do know to date. We will be updating this page with further information as more retailers publish their financial results over the coming weeks.

Morrisons

The retailer struggled to achieve year-on-year growth during the four weeks up to Christmas. Sales were back by 4.3% in terms of sales value in comparison to last year.

Co-op

Co-op showed the highest decline in sales in the four weeks up to Christmas. Grocery sales were back by 8.5% (sales value) compared to the same period last year.

Asda

Asda also failed to achieve year-on-year sales growth. Kantar data shows sales value was back by 1.1% compared to last year.

Waitrose

During the four weeks up to Christmas, Waitrose was another retailer who failed to achieve year-on-year sales growth, with sales value back by 1.1% compared to last year.

Source: Kantar

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