Shoppers in the UK spent a total of £51.4bn on FMCG in the second quarter of 2024, an uplift of just 1.3 per cent compared with the same period last year, shows the data from the latest NIQ Retail Spend Barometer.
Value growth for the FMCG sector dropped from 6.1 per cent in Q1 to 1.3 per cent in Q2, despite a boost in consumer confidence and falling inflation. NIQ attributed the slowdown in growth largely to the timing of events such as Easter, the weather and promotional activity, which had a bigger impact on sales in the short term.
This is reflected in the decline of certain categories, such as beverages, which dropped from a 5.4 per cent uplift in Q1 to a 1.5 per cent decline in Q2. Snacking too dropped from a 13.2 per cent growth in Q1 to just a 1.2 per cent growth in Q2.
However, the fall in inflation is expected to gradually boost consumer spending as available disposable income slowly improves for many households. According to recent NIQ Homescan data, although sales for own-label items remain slightly ahead of branded items, the gap in growth levels is starting to narrow as brands use promotions more to drive volume recovery.
Ben Morrison, Retail Services Director UK & IRE at NIQ, commented, “While growth in FMCG was flat in Q2, there are positive signs for the quarters ahead with inflation figures starting to fall. Retailers are now under pressure to compete for shopper spend and we’re already seeing levels of promotion being maintained at 25 per cent of sales compared to 22 per cent for Q2 last year.
“Moving into Q3, we do expect to see growth levels improve with FMCG value growths in the range of +2 per cent to +3 per cent, helped by warmer weather. In addition, the uplift from Euro 2024 and potentially the Paris Olympics should help to provide the feel-good factor missing in Q2 and give a boost to industry sales."
Morrison continued, “In terms of Tech & Durables, it remains a challenging market. Gone are the days of longer-term, more considered purchases. Consumers today are choosing to make purchases based on what they need in the moment – such as new luggage for holidays or new TVs for the Euro 2024 matches.
“Moreover, they are buying less but buying better. This is not just in terms of more premium products for those that can afford it, but investing in products where benefits meet needs, and consumers perceive the value is justified. An example of this is that the demand continues to rise for products such as Full Auto Coffee Machines, indicating consumers are still prepared to pay a premium for the right experience.”
