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Big supermarkets hit four-year sales record, but discounters taking bigger slice

By Oliver Haill

Date: Tuesday 22 Aug 2017

Big supermarkets hit four-year sales record, but discounters taking bigger slice

(ShareCast News) - UK supermarkets have had an eventual last few months, with the big four supermarkets enjoying their strongest run in four years and discounter Lidl stepping up to become the seventh largest grocer in the country.
The 12 weeks ending 13 August saw overall supermarket sales grew 4.0% year-on-year, research from Kantar Worldpanel revealed on Tuesday, up from the 3.9% reported a month ago but down from the 5% reported in June.

Like-for-like grocery inflation ticked up to 3.3% from the 3.2% level it had held for the previous two months.

The four largest grocers grow sales for the fifth consecutive period, which Kantar's head of retailer and consumer insight, Fraser McKevitt, said was a run of collective success not seen since 2013.

"However, this welcome period of sustained growth hasn't been enough to entirely offset pressure from the discounters: the big four now account for just 69.3% of the UK grocery market - down from 76.3% five years ago - and that looks set to fall further in the coming months."

That move was typified by the rise of German limited assortment discounter Lidl, which saw sales sales mushroom 18.9% in the 12-week period as ten million households visited its stores for alcohol and fresh produce in particular.

Lidl thereby upped its market share from 4.5% a year ago to 5.2% to overtake Waitrose on 5.1% and become the UK's seventh largest grocer.

Way out ahead with 27.8% share was Tesco, though this was down from 28.1% a year ago, despite a 3% increase in sales.

Sainsbury's saw a 2% sales boost but saw its share shrink to 15.7% from 13.1%.

Walmart's Asda saw sales swell 1.4% but its market share also fell to 15.3% from 15.7%, while Morrisons grew sales 2.6% but saw its share drop to 10.4% from 10.6%.

Sixth place Aldi, Lidl's fellow German LAD, lifted sales 17.2% and saw its share jump to 7% from 6.2% a year ago.

Online specialist Ocado was the third fastest growing group in the sector as it lifted sales 12.6% over the 12 weeks, for a market share of 1.4% that is up one percentage point over the year.

Co-op was the only big chain where sales fell during the period, down 0.4%.

On inflation, Kantar noted that prices have been rising since the 12 weeks to 1 January 2017, following a period of grocery price deflation which ran for 30 consecutive periods from September 2014 to December 2016.

Prices are rising fastest in markets such as butter, fish and cola with all major categories now registering inflation.

NIELSEN DATA

Similar data from researchers at Nielsen also released on Tuesday noted the highest year-on-year rise for at least four years in the amount shoppers spent on groceries, at 5.1%, with supermarket sales growing at 2.5% in the four weeks ending 12 August.

Nielsen noted that sales of soft drinks and fresh produce were particularly impacted by the cooler weather this year and a heatwave last year, with drink sales falling 6.1% year-on-year and fresh produce down 1.4%.

Confectionery saw a 7.0% rise year-on-year and packaged grocery products were up 5.5%.

"It's a bit of a reality check after two months of really impressive growth, as shopping patterns were disrupted by the return of cooler weather and people going on their summer holidays," said Mike Watkins, Nielsen's UK head of retailer and business insight.

"Although the market has recovered from the low-point 12 months ago, the return of inflation and rising concerns about the economy mean the weekly grocery shop is now the most popular target for people to cut down on household expenses². Thirty percent of Britons now admit to buying cheaper grocery brands to save money."

In light of the squeeze on consumers from inflation being higher than wage growth, Watkins noted that shoppers were intending to save money but were "still willing to purchase affordable indulgences in food and drink", implying that maintaining promotional activity and loyalty will be key to supermarkets increasing sales in the coming months in the absence of an Indian summer.

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