Brexit effect is proving elusive as mid-size retailers gain ground

Kath Hammond

Brexit has not hit the grocery sector yet with sales showing slow growth despite strong performances from the mid-size retailers and discounters. Kantar Worldpanel reveals the grocery market share figures for the 12 weeks to July 17

Watch Fraser McKevitt’s video report here.

The latest grocery share figures show slow growth with sales barely squeaking up by 0.1% compared to last year and no sign so far of any Brexit fallout.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, says: “The EU referendum result has had no immediate impact on the prices retailers are charging or the sales volumes consumers are buying over the past 12 weeks. The nation’s average shopping basket is 1.4% cheaper than a year ago, exactly the same level of deflation as reported last month, and it remains to be seen if the Brexit vote will bring about any price rises this year.”

McKevitt points out that unseasonable summer weather hindered many sales lines including barbecue stalwarts, sausages, which fell by 6.3%.

Looking at individual performances, sales at Tesco fell by 0.7%. The retailer’s market share declines are now slowing, down by 0.2% percentage points to 28.3% of the market – this is Tesco’s slowest rate of share loss since March 2014 and has been helped by an improved performance from its larger stores.

At Sainsbury’s sales fell by 1.1%, taking market share down by 0.2 percentage points to 16.3%. Fraser McKevitt comments: “Sainsbury’s has followed through on its promise to remove multibuy offers from its shelves in favour of everyday low prices and simple price cuts and less than 1% of its sales now require shoppers to pick up more than one item to feel the benefit of the promotion.”

Meanwhile, at Asda incoming chief executive Sean Clarke was witness to a hefty 5.6% fall in sales, with share slipping to 15.5%. McKevitt explains: “Asda is alone among the big four retailers in increasing the proportion of sales made on promotion compared with last year. However, its absolute level of sales sold on a deal remains behind its large competitors, where promotions account for 45.2% of sales.”

At fellow Yorkshire retailer Morrisons, sales put in their best performance since January with a fall of just 1.8%.  “These figures still reflect its wave of store disposals in 2015 and their impact on Morrisons’ performance should start to lessen in the next few months,” McKevitt says. “While Morrisons’ overall market share fell by 0.2 percentage points to 10.7%, its premium own-label lines showed strong growth of 3.8% – the best premium private-label performance among the big four.”

Looking at the performance of the mid-sized retailers is more cheering and growth continues at Iceland, where sales are up 2.8% year-on-year. Co-op increased sales by 2.1% and Waitrose grew 1.6%. All three of these retailers gained market share for the third consecutive period, moving up to 2.1%, 6.4% and 5.1% respectively.

Shopper numbers visiting the discounters are swelling too fuelling the growth of both Lidl and Aldi. A 5% increase in the number of shoppers visiting either retailer this period helped Lidl reach a new market share high of 4.5% with a sales increase of 12.5% while Aldi, with sales up 11%, increased market share to a record 6.2%. 

Kantar Worldpanel Till Roll July 17, 2016

An update on inflation

Grocery inflation now stands at -1.4%* for the 12 week period ending July 17, 2016. This means shoppers are now paying less for a representative basket of groceries than they did in 2015. This is the 24th consecutive period of grocery price deflation. Falling prices reflect the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories such as pork, detergents and snacks and crisps.

*This figure is based on over 75,000 identical products compared year-on-year in the proportions purchased by shoppers and therefore represents the most authoritative figure currently available. It is a ‘pure’ inflation measure in that shopping behaviour is held constant between the two comparison periods – shoppers are likely to achieve a lower personal inflation rate if they trade down or seek out more offers.



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