Sainsbury’s remains out front as UK supermarkets record fastest growth in five months

Gill McShane
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The UK grocery market has recorded its fastest rate of growth since October 2015 with supermarket sales up, albeit only by 0.5%, compared with a year ago, according to Kantar Worldpanel. Once again, Sainsbury’s was the only Big Four retailer to post a sales increase, although Tesco slowed its sales decline thanks to renewed price promotions. Head of retail and consumer insight Fraser McKevitt gives us the rundown of the latest market share figures published today (Tuesday, March 8) for the 12 weeks ended February 28, 2016

Watch the video presentation here.

Although supermarket sales are rising more quickly than in the last few months, McKevitt points out that they are still being held back by the ongoing price war and falling grocery prices, which are down by 1.6% – a continuous decline that began in September 2014.

“Despite prices continuing to decline, the combination of Valentine’s Day, and consumers stocking up for an early Easter has boosted certain categories,” he explains. “February chocolate sales are up by 13%, cut flowers have increased by 7%, and sparkling wine sales are up by 15%.

“New Year resolutions to eat more healthily don’t seem to have been forgotten, helping fruit and vegetable revenues to grow by 4% despite like-for-like produce prices falling.”

Kantar Worldpanel UK grocery market share February 2016

Big Four results

Sainsbury’s: Across the main retailers Sainsbury’s was again the only one of the big four to increase overall spend, reports Kantar Wordpanel. Sales grew for the eighth period in a row, up by 0.5% – this is the longest run of sales growth for any of the four main retailers since March 2013.

Sainsbury’s has been boosted by strong online sales and its Sainsbury’s Local convenience stores, though its overall share remained flat at 16.8%.

Tesco: The UK’s biggest supermarket operator’s positive run continues as its overall sales fell by 0.8% – halving last month’s decline of 1.6%. “A renewed focus on price promotions has helped stem the flow of shoppers leaving the retailer despite the closure of around 50 stores in the last year,” McKevitt says.

Morrisons: The fourth-largest retailer is also operating fewer stores than last year, which continues to contribute to Morrisons’ falling sales – this month down by 3.2% with market share dipping to 10.6%.

Online, Morrisons’ sales are growing strongly, Kantar Worldpanel states – a trend set to continue in the coming months as the retailer converts more existing in-store shoppers to its e-commerce channel.

“Despite being a relative latecomer to online grocery, Morrisons’ forthcoming tie-up with Amazon could provide another boost to the business,” McKevitt suggests.

Compared with the 0.5% growth in the overall market, sales in larger stores have fallen by 2% as consumers spend less per average trip in these shop formats.

Asda: This has disproportionately affected Asda and its large stores, with sales falling by 4% and market share down to 16.2%.

Waitrose: The premium retailer saw sales growing by 0.2%, maintaining its 5.2% share of the market for the third period in a row.

Smaller retailers

Across the smaller retailers, market share gains were made by the Co-operative, Aldi and Lidl.

The Co-operative’s share grew to 6% after an increase in shopper frequency contributed to a sales increase of 1.9%.

The discounters’ combined share climbed back to the 10% high they reached before Christmas. Lidl’s sales grew by 18.9% and Aldi’s by 15.1%. 

Kantar Worldpanel UK grocery market share results February 2016

Changes ahead

With current Sunday trading restrictions up for debate this week Kantar Worldpanel notes that the UK grocery retail sector could be on the brink of a change to shopping hours but whether it will have any real impact on sales is another question.

“In an average week 32% of households visit a grocer on a Sunday,” McKevitt explains. “This is considerably fewer than the 46% visiting on a Saturday, the most popular day to shop.

“When stores could stay open for the full day during the 2012 Olympics and Paralympics we witnessed only a marginal increase in the proportion of groceries bought on a Sunday, suggesting longer opening hours won’t necessarily translate into greater sales.”

Inflation update

Kantar Worldpanel reports that grocery inflation now stands at -1.6% for the 12-week period ended February 28, 2016.

This means shoppers are now paying less for a representative basket of groceries than they did in 2015. This is the 19th consecutive period of grocery price deflation.

The 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.

 

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