New Year health kick promotes strong fresh food sales at British grocers

Gill McShane
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The British grocery market is returning to slow growth after a disappointing Christmas period; delivering a take-home sales increase of 0.2% to £27.3m. Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, gives the lowdown on the latest grocery share figures published today (Tuesday, February 9) by Kantar Worldpanel for the 12 weeks ended January 31, 2016

Watch Fraser McKevitt’s analysis in this video.

While the overall grocery market’s growth has been slight, New Year health kicks among British shoppers have contributed to a strong performance across fresh foods.

“Consumers are clearly striving for a healthier start to the year and have turned to fresh foods – particularly fruit and vegetables, which have both grown sales by 5%,” explains McKevitt.

“Given that they’re still experiencing like-for-like deflation, it’s a significant revenue growth for both categories that’s shared across both traditional and discount retailers. Similar growth has been seen in nuts, fresh poultry and fish.”

Retailer results

UK grocery retailer results 12 weeks to Jan 31 2016

The Co-operative: For the first time since 2011 the Co-operative was the fastest growing non-discounter; increasing sales by 1.4%. The convenience-focused grocer grew its own-label sales by 7%, with sales up fastest in the fresh and chilled part of the store.

The Co-operative is the most frequently visited major supermarket – customers shopped there an average of almost 19 times over the past 12 weeks, compared with a market average of 11 visits. Its market share remains stable at 5.9%.

The discounters: Recent trends at Aldi and Lidl continue. Both saw their growth accelerate – Lidl to 18.7% and Aldi to 13.7%. Both also saw their share of the market increase by 0.7%, with Lidl’s rising to 4.2% and Aldi’s to 5.6% – a dip from the 10% combined market share high they experienced at the end of 2015.

McKevitt expects both retailers to continue to take market share this year as they fulfil their plans for more outlets.

Sainsbury’s: Big Four retailer Sainsbury’s increased its sales for the sixth period in row, growing by 0.6% with a resulting market share increase of 0.1% to 16.8%.

Tesco: The UK’s largest supermarket operator, Tesco, showed signs of improvement – while revenues fell by 1.6% these are the best numbers posted by the retailer since September of last year.

Morrisons: The sales decline at Morrisons lessened to 2.2%, while market share fell by 0.3% to 10.8%. The retailer’s revenues will continue to reflect its disposal of 140 M Local stores and the closure of some larger outlets through the rest of 2016.

Asda: The Wal-Mart owned chain’s recent announcement of renewed price cuts has not yet had time to materially affect its latest 12-week figures, with Asda’s sales falling by 3.8% and share falling back to 16.2%.

Waitrose: Although upmarket retailer Waitrose’s market share remained static at 5.2%, sales increased by 0.1%. This makes it the 91st consecutive period of growth for the retailer – the longest current run of success for any supermarket.

Inflation update

Grocery inflation now stands at -1.6% for the 12-week period ended January 31, 2016, according to Kantar Worldpanel.

This means shoppers are now paying less for a representative basket of groceries than they did in 2015. This is the 18th 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 crisps, eggs and butter.

UK grocery market share 12 weeks to Jan 31 2016 

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