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Eat Out to Help Out blamed as supermarket sales drop by £155m

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3-min read
A general view of an Eat Out to Help Out sign outside of a busy restaurant on Kingly Street, London.
An Eat Out to Help Out sign outside a busy restaurant on Kingly Street, London. Photo: PA

Grocery shopping declined by £155m ($199m) in August as the government’s Eat Out to Help Out scheme encouraged people to dine in restaurants instead of cooking at home.

Market research firms Kantar and Nielsen both released data on Tuesday showing growth in supermarket sales slowed markedly in August. Kantar said spending in supermarkets was £155m lower in August than in July.

Fraser McKevitt, head of retail and consumer insight at Kantar, said the government’s Eat Out to Help Out scheme was behind the decline. The scheme gave diners 50% off their food bill at participating restaurants every Monday to Wednesday throughout August. Over 100 million meals were eaten using the scheme.

READ MORE: Ocado shares jump as sales soar 52%

“Grocery growth tailed off in August as the government’s Eat Out to Help Out scheme got underway and people were encouraged to return to offices and resume normal routines,” McKevitt said.

“Diners’ confidence built throughout the month and footfall increased during each week of the scheme, culminating in the final bank holiday Monday when dining out accounted for a two and a half times greater share of consumer spend than the pre-Covid average.”

Supermarket sales grew by 10.8% over the past 12 weeks when compared with the same period last year, Kantar said. Momentum slowed to growth of just 8% in August.

Iceland
Excluding online-only grocers, Iceland was the fastest growing supermarket in August. Photo: Dinendra Haria/SOPA Images/LightRocket via Getty

Nielsen, a rival data company that surveys British households, on Tuesday estimated that UK supermarket sales slowed to 5.3% in August, ending “an extended period of accelerated growth.” The company said sales in fact shrank by 1.6% when online grocery shopping was not included.

Online grocery sales also slowed in August. Kantar said growth in online sales slowed for the second month in a row, although sales still grew by a blockbuster 77%. Nielsen estimated that online sales grew by 102% in August.

Online sales now represent 12.5% of total grocery spending, Kantar said, down from a peak of 13.5% during the height of the pandemic.

READ MORE: COVID-19 costs Morrisons £155m

Ocado (OCDO.L) was the fastest growing grocery retailer over the past 12 weeks, according to Kantar, growing sales by 41.2%. Iceland came second, with a 20.8% jump in sales. Tesco (TSCO.L), Morrisons (MRW.L), Aldi, Co-op, and Lidl all also saw double-digit percentage increases in sales.

Both Nielsen and Kantar predicted a rise in discounting at supermarkets in the coming months. Kantar said promotional activity in supermarkets was now at its highest level since February.

“With more COVID-19 headwinds set to come and a fragile economy, a weakened shopper sentiment will likely start to impact consumer spend overall,” said Mike Watkins, Nielsen’s UK head of retailer and business insight.

“Many retailers are re-positioning their strategies, launching new ad campaigns and focussing on price cuts.”