The latest grocery share figures from Kantar Worldpanel, published for the 12 weeks ending October 9, show Tesco increasing sales and grabbing market share as well as a boost for premium ranges across the board
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Tesco has increased its sales by 1.3% – marking a return to growth for the UK’s largest retailer for the first time since March 2015, also posting growth well ahead of the overall market, where sales increased by 0.8% on last year. Finally, the beleaguered supermarket grabs back some market share for the first time in five years.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, says: “Foods including ready meals and produce have been among the fastest growing areas at Tesco, helped by its Farm Brands but also its standard own-label lines. Tesco has attracted a further 228,000 shoppers through its doors to help the grocer grow to a 28.2% share of the market – its first year-on-year market share gain since 2011. Sales growth has been strongest among family shoppers, while improved trading from its larger supermarket and Extra stores has supported this month’s gains.”
With volume growing ahead of value, McKevitt dubs the performance a “volume-led” recovery, and points out that as standard own-label lines are also experiencing sales uplift, it looks as though the retailer is not enduring “too much cannibalisation”.
As growth in the market at large has been recorded at 0.8%, it is higher than in recent months but still slow in historical terms. Could this mean the end of a spell of falling prices that dates back to 2014? Are Brexit-induced signs of inflation on the horizon. McKevitt thinks so: “The two-year era of falling prices is almost certainly coming to an end,” he says. “But not quite yet. The direction of travel is clearly towards rising prices. Our best current estimates suggest that by the end of the year.”
Other retailers winning market share this month include Iceland, Co-op and Waitrose. Iceland increased sales by 6.9% with success across the store, and not just in its core frozen lines, which this period accounted for only 41% of sales. Chilled and ambient grocery sales also grew, as did Iceland’s branded soft drink and frozen ready-meal lines, and market share rose by 0.1 percentage points to 2.1% as a result. Kantar Worldpanel data puts this growth down to the performance of brands in contrast to other retailers where own label has been driving growth. “Price-per-pack increases suggest a subtle move up market and a widening of the retailer’s appeal,” explains McKevitt.
Co-op recorded its 17th consecutive 12 weeks of growth this period. “Co-op’s sales are up by 3.1% compared to a year ago, taking share up to 6.5% of the market,” says McKevitt. “Consumers are continuing to buy from Co-op stores more frequently with the average shopper now visiting almost twice a week – an 8% increase. The convenience retailer is responding to challenges from the wider market by focusing on its own-label lines, with its re-launched membership card rewarding shoppers who choose Co-op’s own products.”
At Sainsbury’s, sales fell by 0.4%, while Morrisons continues to feel the effects of a smaller store portfolio with sales down by 3%. The re-launch of its The Best range has had a positive impact on its premium own-label sales, which increased by 6%. There was a similar picture at Asda where sales were down by 5.2% – its slowest rate of decline for four months – despite a premium own label sales increase of 8%.
Meanwhile, Waitrose’s figures have been buoyed by September’s half-price event at the retailer with sales growing by 3.5% and contributing to a market share increase of 0.2 percentage points to a total of 5.4%. This has also pushed its level of sales on deal to just behind Tesco’s.
At Aldi sales increased by 11.4% while at Lidl they grew by 8.4%, taking market share up to 6.2% and 4.6% respectively and maintaining the combined market share high of 10.8% which the two retailers achieved last month. McKevitt believes that these retailers’ continued emphasis on premium own-label lines will see further gains leading up to Christmas.
Grocery inflation now stands at -0.8%* for the 12-week period ending October 9. This means shoppers are now paying less for a representative basket of groceries than they did in 2015. This is the 27th 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 bacon, crisps, poultry and detergents.
McKevitt says: “While the threat of rising prices is on a lot of minds at the moment, we’ve seen the 27th consecutive period of grocery price deflation, albeit at a slower rate. The price of everyday groceries fell by 0.8% compared with a year ago and in contrast to the -1.1% reported last month, with deflation particularly noticeable among pork, crisps and poultry products.”
*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.