The grocery market is growing at 1.1%, the fastest rate since June 2014, according to a new survey.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Shoppers are taking advantage of both lower fuel prices and the continuing price war among the supermarkets to slightly increase their grocery spending. This has pushed the market into 1.1% growth, low by historical standards but a considerable improvement compared to November 2014, when the market contracted.”
“All of the major grocers have continued to compete fiercely on price leading to like-for-like grocery prices falling by 1.2%. This is another record low, saving Britain’s shoppers £327 million over the past 12 weeks.
“Tesco returned to growth for the first time since January 2014, increasing sales by 0.3% compared to this time last year. Britain’s largest retailer is bouncing back from a tough year, with Dave Lewis’s efforts to overhaul the supermarket attracting an additional 236,000 shoppers into its stores in the last 12 weeks. Despite the increase in sales, Tesco’s overall market share fell to 29.0%, down by 0.2 percentage points compared to last year.”
Asda reclaimed the title of second largest retailer this period with 16.9% of the market, overtaking Sainsbury’s, which traditionally performs more strongly at Christmas than the rest of the year. Both grocers saw sales fall compared with a year ago – Asda by 1.7% and Sainsbury’s by 1.0%. Morrisons’ sales fell by 0.4%, the best performance from the Bradford-based retailer since December 2013.
Fraser McKevitt continues: “Early results suggest that discounters Aldi and Lidl will find their accelerated growth levels hard to match in 2015. Aldi’s growth of 21.2% is still impressive but a relative slowing from its 36% peak in May 2014. Likewise, Lidl’s maximum growth of 24% in the same period is now down to 14.2%. Despite this slowdown, both retailers are still taking share from the other retailers – rising 0.8 percentage points and 0.4 percentage points respectively to 4.9% and 3.5%.”
At the premium end of the market Waitrose has supported growth with a greater focus on price and promotion. This has resulted in a sales rise of 7.2%, taking its overall share to 5.2%.
Grocery inflation has seen its 17th successive fall and now stands at -1.2% for the 12 week period ending 1 February 2015.
This means shoppers are now paying less for a representative basket of groceries than they did in 2014. This is another record low since Kantar Worldpanel began recording GPI in October 2006 and reflects the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories including vegetables, milk and bread.
