Introduction

We have found clear winners and losers in this survey, this article will outline our findings and implications for the share prices of the concerned in 2016.

We will firstly outline the findings then conclude the implications central to the purpose of our study.

Sainsbury’s has attracted more Christmas shoppers this year (2014: 16.67%, 2015: 19.84%) whereas Tesco’s share has fallen (2014: 30.95%, 2015: 27.78%).

We feel this could play out in 2016 with Tesco underperforming Sainsbury’s shares as Sainsbury’s attract those shoppers who are turning away from Tesco.

There was little difference in the number of customers Morrison’s had through their doors but Asda suffered with a small decline.

The big winners of this year’s Christmas shopping activities have been, as many of you may have guessed, Lidl and Aldi. Both of their market share as markedly improved and appear to have benefited from savvy Christmas shoppers seeking bargains.

The Discount Store Take Over

The popularity of discount supermarkets has been a thorn in the side of the major supermarkets through 2014/2015, our findings suggest the pain discounters are causing the top four is only going to get worse.

36.51% of our respondents said last year they bought some of their Christmas dinner ingredients from discount stores where as a whopping 54.76% said that at least one of their Christmas dinner ingredients would be from stores such as Aldi or Lidl in 2015.

We must reiterate that 54.76% said they bought at least one item from discount stores, not the majority of their shopping, our respondents are still opting to do the bulk of their shopping in larger supermarkets.

What this shows is consumers are slowly fragmenting their shopping habits and going after value where possible by spreading out where they buy certain items.

These particular trend could well be the most significant of our entire survey as it highlights the extent shoppers are ‘shopping around’ at a higher rate to find cheaper goods of a reasonable quality.

This shift in customer behaviour began in ernest in 2014 and is snowballing.

Our projection is a continued rise in market share of discount stores forcing major supermarkets to change thier strategies, leading to price war that will damage the margins of the likes of Tesco and Sainsbury’s.

We feel the ‘discount store take over’ has the possibility to be largest factor in the disappointment we now feel will come from FTSE 100 supermarket Christmas sales reports and cause further underperformance in thier share prices.

Supermarket Loyalty

Our analysis has uncovered which supermarkets have the highest levels of consumer loyalty when it comes to opting to do their Christmas shopping at the same supermarket to where they would ordinarily do their grocery shopping.

Loyalty Levels:

Marks & Spencer: 97.9%

Morrison: 85.7%

Sainsbury: 78.6%

Tesco: 74%

Asda: 65.6%

We found those supermarkets which enjoy a higher proportion of weekly grocery market share are likely to have the most disloyal customers who have an inclination to chase lower prices and value.

This could impact on Christmas sales figures but the most important deduction is, these ‘disloyal’ savvy consumers are likely to be those that drive a supermarket price war and the erosion of profit margins in 2016.

Special Offers Beat Christmas Adverts

In the battle for market share, price matters. The habits of our survey respondents have cemented this view as 62.7% indicating special offers influenced where they did their Christmas shopping compared to only 12.7% who said Christmas adverts influenced their decisions. This highlights once again grocery shopper’s inclination to opt for value as opposed to exercising any brand value.

It’s interesting to note only a small amount of respondents said adverts impacted on their decisions which may mark the decline in the need to increase brand awareness and the beginning of a trend where supermarkets focus almost solely on conveying the low price of goods.

The ‘Mog the Cat’ advert maybe one of Sainsbury’s last efforts to tug the heart strings of potential customers in an effort to boost sales.

Validity and statistical significance of findings

To gauge the validity of our findings we compared the results of the survey to supermarket market-share data released to Kantar World Panel, one of the world’s largest market insight organisations.

To measure the degree of significance of our results we needed to find strong similarities with Kantar’s research so that our finding can be relied upon as having a strong correlation with real world activities.

We have been satisfied that are findings our consistent with broader studies in as far as the majority of our readings of market share are within 2% of Kantar Worldpanel’s data.

For example, in December Tesco were measured to have a 28% market share by Kantar which compares to our measure of 27.78% of respondents who said they would being their Christmas shopping at Tesco.

We have seen a slight bias towards higher end stores such as Waitrose and Marks & Spencer which we can only attribute to the nature of our publication.

Conclusions

• Listed supermarkets (Tesco, Sainsbury’s and Morrisons) are set to report lower christmas sales than last year, with the exception of Marks & Spencer
• Aldi and Lidl will post record sales
• Price savvy consumers will drive a price war throughout 2016
• Sainsbury’s is likely to outperform Tesco
• Marks & Spencer’s food division will continue to carry their flagging clothing business
• FTSE 100 supermarket shares will underperform the benchmark in 2016

The overall picture is pretty grim for FTSE 100 supermarkets but there is some hope for Sainsbury’s at least, who have reasonably loyal customers and seen an increase in it’s market share bucking the trend for the overall FTSE 100.