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Ocado and Tesco the winners as grocery price inflation boosts supermarket sales

Grocery inflation jumped to 3.1% for the past 12 weeks, with prices rising fastest in products such as bacon, sausages and cooked meats

Ocado Group PLC -

Ocado Group PLC (LON:OCDO) and Tesco PLC (LON:TSCO) saw the best of growth in recent weeks as grocery sales during the coronavirus crisis were the strongest in a quarter of a century, boosted by a noticeable pick-up in price inflation. 

Supermarket spending from the last week February to 17 May were up 14.3% on the equivalent period last year, research from Kantar shows. 

For the whole of 2020, grocery sales could be around 12% higher than last year due to extra purchases of meals, snacks and drinks consumed at home, Kantar predicted, as out-of-home eating is unlikely to return to previous levels for a while yet.

Grocery inflation jumped to 3.1% for the 12-week period, with prices rising fastest in markets such as bacon, sausages and cooked meats while falling in poultry, bread and eggs. Inflation stepped up to 1.9% in the April update, having between 0.9% and 1% from last summer through to March this year.

The growth in the latest three-month figures, which includes both the pre-lockdown rush to the shops in March and eight weeks of the lockdown, has been the fastest in take-home grocery sales since 1994, said Fraser McKevitt, head of retail and consumer insight at Kantar. 

“In the most recent four weeks, the trend towards fewer, larger shops that we saw in April broadly continued,” he said, with shoppers visiting supermarkets an average of three and a half times per week and doubling their spend each trip.  

“While these are bumper figures, it remains true that the overall picture for some grocers will be less positive, as supermarkets continue to feel the impact of a considerable reduction in on-the-go spend on meals, drinks and snacks.”

Those categories usually add up to around £1bn over the course of 12 weeks.

Of the FTSE 100-listed grocers, online specialist Ocado continued to see the fastest sales growth, of 32.5%, with its market share increasing to a new high of 1.6%, up from 1.3% last year.

Tesco’s growth in the period was 12.7%, just ahead of J Sainsbury PLC (LON:SBRY) with 12.5%, with both a step ahead of Wm Morrison Supermarkets PLC (LON:MRW) at 9.8%.

The last member of the big four supermarkets, Asda, saw growth of 6.5%.

One of the notable beneficiaries of shoppers staying closer to home and avoiding queues at large supermarkets was Co-op, which saw sales grow 30.8%, while independent retailers and corner shops saw growth of 63.1%.

Quick facts: Ocado Group PLC

Price: 2288.9748 GBX

LSE:OCDO
Market: LSE
Market Cap: £17.18 billion
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