Grocery growth still sluggish in UK as prices continue to fall

Gill McShane
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Kantar Worldpanel latest grocery market share results to August 16 2015

The British grocery market is continuing to experience slow growth, with sales of around or below 1% becoming the new norm, according to the latest grocery share figures from Kantar Worldpanel, published today (Tuesday August, 26) for the 12 weeks ended August 16, 2015

Watch the video report from Fraser McKevitt here

Total sales rose just 0.9% compared with the year-earlier period, explains Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel. “Despite the accelerating British economy like-for like grocery prices are still falling, with a representative basket of everyday items now 1.7% cheaper than in 2014,” he points out.

Grocery inflation now stands at -1.7% for the latest 12-week period, meaning UK shoppers are now paying less for a representative basket of groceries than they did in 2014. Falling prices reflect the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories including eggs, bread and tea.

But in the 12 weeks to August 16, Kantar Worldpanel reports that prices have contracted by a greater decline than the -1.6% reported last month which means prices are falling faster than they were previously.

How the key players fared

Waitrose, the Co-operative, Aldi and Lidl enjoyed another successful period, according to Kantar Worldpanel, while Sainsbury’s was the only one of the ‘big four’ retailers to see an increase in sales, albeit only by 0.1%. Sales at Tesco, Asda and Morrisons fell by 0.9%,  2.5% and 1.1% respectively. Iceland also saw growth.

Waitrose’s ‘Pick Your Own Offers’ promotion helped to drive growth of 3.7% at the high-end retailer, the analyst notes. And, for the second month in a row the Co-operative saw growth, where sales at the till were up by 1.1% compared with last year.

The discounters also continued to performed well. Growth at Aldi accelerated to 18% and Lidl’s sales rose by 12.8%, taking its market share to a new high of 4.1%.

Thanks to recent efforts to create a more premium image for frozen food, as well as new store openings including its Food Warehouse format, Iceland is attracting more shoppers through the door than last year, according to Kantar Worldpanel. Sales in the latest 12-week period were up by 3.4% as a result, although the retailer’s market share remains flat at 2%.

Posting its first growth since March, Sainsbury’s 0.1% sales increase put the retailer’s performance slightly behind the market. The firm’s year-on-year share also fell by 0.1 percentage points to 16.3%.

Despite a fall in sales of 2.5% and a 0.6 percentage point fall in market share, Asda retook its position as Britain’s second largest supermarket, as anticipated by Kantar Worldpanel.

“The retailer’s greater focus on non-food items means its market share is traditionally higher in the summer, and it’s expected that Sainsbury’s will again become the number two retailer towards Christmas,” McKevitt explains.

With sales at Tesco falling by 0.9% during the 12 weeks to August 16, Kantar Worldpanel claims the retailer now holds 28.3% of the market. Buoyant growth in the convenience stores and online was not enough to offset lower revenues in the larger shops.

Morrisons, meanwhile, experienced an increased sales decline of 1.1% this month, which Kantar Worldpanel says reflects a tougher comparison against last year, when a widespread voucher promotion was in place at the retailer.

Take a look at a snapshot of the UK’s grocery market share for the latest 12-week period here.

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