Home > Insights > Inflation continues to drive FMCG sales value growth marking fifth consecutive quarter of decline across Europe’s six largest markets
April 28, 2023
BRACKNELL, UK – 26th April 2023 – Ahead of its latest biannual ‘FMCG Demand Signals’ report which covers Total Store Data, Circana (formerly IRI and The NPD Group), has today revealed softening of demand in unit sales across the six largest markets in Europe (France, Italy, Germany, Spain, UK and Netherlands) – a decline of -1.1% on an annual basis, deepening further by -1.4% in Q4 2022. This is the fifth consecutive quarter of decline and is not forecast to return to normalcy until the end of 2023.
Forensically unpacking the impact of the pandemic, inflation, and cost-of-living crisis on over 230 FMCG categories, 2000+ product segments and over a 10 million SKUs, the report also flags the rise of the ‘prosumer’ – a more price-aware, savvy, and forward-looking consumer looking to adapt what they buy and how they consume. As such, Circana is heralding the end of the ‘destination shop’ as consumers buy less to moderate the continued grocery shop price increases.
With the ongoing energy crisis and the entrenched war in Ukraine impacting supply chains and the cost of ingredients and shortages, shoppers are still adapting how they buy and use everyday products in Europe.
Ananda Roy, Global SVP, Strategic Growth Insights, Circana, commented: “This decline in unit sales is the clearest indication yet that demand is dragging across the largest European FMCG markets. We’re forecasting unit demand to decline sharply in Food Staples where price inflation continues to be the most intense.
“What is now becoming a ‘standard-of-living crisis is requiring shoppers to change how they try, buy and use everyday items. In fact, a staggering 86% of European shoppers have reported changes to their ability to buy and willingness to pay being stretched.As a result, many are having to adopt a strategic approach to their shopping – making tough decisions and only based on needs. They are no longer sleep walking into the store and getting their heads turned by impulse buys and clever marketing promotions.
“Sadly, an increasing number of shoppers are having to strip what they buy back to an almost quasi-Dickensian existence – looking for yellow-stickered items, even if they’re out of date, increasing the use of food banks, and reports of an increase in shoplifting amongst all major retailers.
“However, retailers have stepped in by increasing targeted promotions through loyalty cards, ‘price locks’ and price matching across retailers, and keeping between 500 to a 1000 items priced as low as possible whilst also encouraging the use of scan-as-you-shop devices.”
Key European highlights:
Consumer behaviour insights across the six largest markets in Europe and the USA, Australia, New Zealand, Brazil, Turkey, UAE:
Roy concluded: “With reduced demand and lower shopper confidence, retailers are having to optimise their ranges to maintain the availability of core items. They’re also price locking staples to support customers, which is leading to a stealth price war. Rationalisation is taking place across all categories except for Chilled & Fresh & Confectionery, and we’re expecting to see the gradual return of Every Day Value Pricing as retailers are finding promotions less effective. It’s a good time to be removing the bad deals and fine-tuning target audiences to better support them.”
The full report will launch on 10 May 2023.
About FMCG Demand Signals
Circana’s ‘FMCG Demand Signals’ report describes value trends across food and non-food categories, across channels, pricing and promotions, and identifies key growing and declining categories. The focus on manufacturer and retail trends, spotlights on distribution, pricing, innovations, and item-level demand complete the picture.
Circana’s data scientists study billions of transactions across the USA and several of the largest European and Asia-Pacific markets to provide clarity on what drives commercial value.
‘Demand Signals’ is a biannual report powered by Liquid Data® and Unify®, a proprietary technology platform that clients use to interrogate key performance measures as they happen.
Circana’s next Demand Signals report will appear in October 2023 and will cover the second half of 2023, detailing the effects of the inflationary impact on household consumption and discretionary purchases.
The consumer behaviour insights originate from Circana’s ‘Crisis At Every Step’ Inflation Survey; which was conducted across 3,000 shoppers from the USA, Australia, New Zealand, Brazil, Turkey, UAE and in Europe (UK, France, Spain, Germany, Italy and The Netherlands).
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