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U.S. grocery sales volume weakened in December

U.S. grocery sales volume weakened in December

According to published reports, U.S. grocery sales continued to slump in December, despite price deflation.

According to IRI, dollar sales were down by 1.7% (excluding mass merchants like Walmart) in the four weeks ended December 18, 2016 as compared to the same period a year earlier.  In addition, sales volume was down by 2.3%. These decreases represent the weakest monthly sales growth figures since November 2013, when sales were affected by a Thanksgiving calendar shift.

BMO Capital Markets Analyst Kelly Bania was at a loss to explain the slowdown.

“We initially thought maybe there was a trade-out to restaurants. But we haven’t seen anything in the restaurant data to support that,” Bania said. “It doesn’t look like it’s a shift to Walmart either. We don’t have a great explanation for it.”

Burt P. Flickinger III, managing director for Strategic Resource Group, suggested that holiday promotions for department stores and mass merchants may have drawn more dollars away from grocery than usual. He also mentioned relatively light promotions from consumer goods companies as a possible culprit.