Costeau: The Great Christmas Grocery Wars

Costeau

There’s something magnificently British about the way our supermarkets approach Christmas. While other nations might focus on the spiritual or familial aspects of the season, we’ve turned it into a gladiatorial contest between retail giants, each determined to out-discount the other until someone cries uncle – or runs out of carrots to sell at 8p.

Christmas 2024 proved to be the most deliciously vicious grocery war in recent memory. Sales performance reached a record high of £14.6bn in the three weeks to Christmas as retailers slashed prices and ramped up promotional activity to woo shoppers. This wasn’t just commerce; this was theatre with shopping trolleys.

The clear winner of this festive bloodbath was Tesco, which managed something remarkable: increasing grocery sales by 6.8% year-on-year over December and growing its market share to 28.5%. More tellingly, more than 18 million customers bought Tesco’s Finest range, driving a 16.7% sales increase, resulting from a net switching from premium retailers. In other words, Tesco didn’t just win the bargain hunters—they convinced middle-class shoppers to abandon Waitrose for their posher offerings. That’s not just victory; it’s colonisation.

But the real story wasn’t in market share percentages – though Tesco achieved its highest market share since December 2017 – it was in the spectacular race to the bottom that characterised the season. Supermarkets took the cheap veg battle to a new low of 8p this Christmas. This for vegetables that presumably cost more than that to transport from farm to shelf.

The promotional madness reached genuinely absurd levels. Spending on deals now makes up 28.6% of all sales, and more than a quarter of all FMCG sales were purchased on promotion over Christmas, as the UK grocery sector hit its highest level of promotions for three years. We’ve reached the point where buying something at full price feels like a moral failing.

Tesco’s strategy was particularly cunning: price cuts on nearly 2,700 products helped attract shoppers, offering a full Christmas dinner for just £2.09 per person. This is either remarkable value or a sign that we’ve completely lost our collective minds about what food should cost.
The German discounters continued their relentless march through British shopping habits. Lidl was the fastest growing retailer with a bricks and mortar presence for the 15th period in a row, continuing this run into a second year. Meanwhile, Ocado topped the growth table, boosting its sales by 9.5%, proving that even in a cost-of-living crisis, there are enough people willing to pay premium prices for the privilege of not having to enter an actual shop.

What made Christmas 2024 particularly fascinating was the way it exposed the strange psychology of British shopping. Despite all the hand-wringing about household budgets, consumers seemed positively eager to spend. Record numbers hit the shops as supermarkets experienced their busiest Christmas since 2019, suggesting that either the cost-of-living crisis isn’t quite as crippling as we’ve been told, or that Christmas shopping represents such a fundamental part of British identity that we’ll do it regardless of economic circumstances.

The industry analysts tried to make sense of it all with their usual mixture of jargon and genuine insight. One noted that a successful peak for 2024 hinged on achieving a delicate balance: driving value-led activity to attract cost-conscious shoppers, whilst safeguarding profit margins. This is consultant-speak for “sell everything cheaply but somehow still make money,” which is roughly as feasible as it sounds.

Perhaps the most telling detail came from Tesco’s post-Christmas analysis: their boss described January as “intensely competitive” as consumers “tighten” their belts after the festive splurge. So we’ve moved from a Christmas of reckless abundance to a January of enforced austerity, mediated entirely by supermarket pricing strategies. There’s something almost medieval about this cycle of feast and famine, except instead of depending on harvest cycles, we’re dependent on whether Sainsbury’s decides to match Tesco’s deal on Brussels sprouts.

Perhaps in the end the real winner in all this wasn’t any particular supermarket – it was the British consumer, who managed to extract remarkable value from retailers engaged in what can only be described as mutually assured destruction through discounting. Eight pence vegetables and £2.09 Christmas dinners represent a kind of economic madness that benefits everyone except, presumably, the supermarkets’ shareholders and the poor farmers growing eight-penny carrots.

As we head into 2025, one wonders whether this level of promotional warfare is sustainable. But knowing the British grocery sector, they’ll probably find a way to make next Christmas even more magnificently, absurdly competitive. After all, we’ve turned Christmas shopping into a contact sport—and frankly, we wouldn’t have it any other way.