German discounters Aldi and Lidl continue to snap at the heels of the UK’s established supermarket chains.
According to the latest grocery market share figures from Kantar Worldpanel, the expansionist pair grew at their fastest rate since January 2015 in the 12 weeks ending 21 May and now claims a record market share of 12%.
Piling on the pressure
Aldi and Lidl’s sales shot up 19.2% year-on-year in the 12 week period and as Chris Hayward, Kantar’s consumer specialist, points out, ‘62% of the UK population shopped in an Aldi or Lidl during the past 12 weeks, compared to just 58% this time last year - that’s an additional 1.1m households visiting either of these stores.’
Temporary top-line relief for the major UK supermarket players came in the form of grocery inflation, which now stands at 2.9%. Prices have been rising since the 12 weeks to 1 January 2017, which reversed more than two years of deflation.
This inflationary uptick helped the UK grocery market’s sales 3.8% higher, its best performance since September 2013. However weak sterling will eventually switch from tailwind to headwind if shoppers begin to pull in their horns.
Big four breakdown
The so-called ‘big four’ - Tesco (TSCO), Sainsbury’s (SBRY), ASDA and Morrisons (MRW) - collectively grew by 1.6% overall, yet shoppers are starting to feel the pinch as prices continue to rise.
As Hayward comments: ‘Once again all ten grocers have seen sales increase, no doubt boosted by higher prices as inflation continues. Own label is also a major source of growth for all of the retailers, with sales up an impressive 6.0% year on year in contrast to branded products which grew by just 0.6% during the same period.
More broadly, a drive for health - perhaps after the excesses of Easter, when the nation consumed £325 million worth of Easter eggs - has helped boost performance, with volume sales of mineral water up 7.4%, eggs up by 5.1%, fresh produce up 2.1% and sugar down 5.6% year on year as shoppers filled their baskets with healthier options.’
Clear market leader Tesco is marked down 1.65% to 182.3p, despite the Dave Lewis-led retail leviathan increasing sales 1.8% year-on-year and attracting over 250,000 additional shoppers over the past 12 weeks.
‘Helped by promotions on barbecue foods as the weather gets warmer,’ explains Hayward, ‘sales of fresh meat grew well ahead of the market at 4.3% vs. 0.9% overall. With support from the Food Love Stories campaign encouraging the Great British public to cook more from scratch, fresh produce also performed particularly well for the retailer.’
Shares in high-flying Morrisons move 1.8p lower to 245.8p, though under CEO David Potts (pictured below), the Bradford-based grocer once again saw the best performance of the big four supermarkets while celebrating six consecutive periods of sales growth.
A key driver of Morrisons’ success has been its premium own label range ‘The Best’, sales of which improved by over a third on last year with almost 800,000 extra shoppers plucking the line from its shelves in the last 12 weeks.
Mike Coupe-steered Sainsbury’s softens 0.8p to 278.9p, investors underwhelmed by a 1.7% sales hike fuelled by strong performances both online and via its Local convenience chain.
