Discounters Continue To Grab Market Share From Big Four; Food Inflation Accelerates

Despite their attempts to halt the exodus of shoppers to the discounters, latest figures from Kantar Worldpanel show that the Big Four multiples are continuing to lose share in a market where food inflation is starting to accelerate.

The data shows that during the 12 weeks to 26 March 2017, overall supermarket sales increased in value by 1.4% compared to the same time last year, a slowdown from last month’s figure of 2.3%. However, Kantar Worldpanel said that the slower growth was primarily due to Easter falling outside the latest 12 weeks, while the celebration fell within the comparable period last year.

In terms of the performance of individual retailers, both Lidl and Aldi reached new record high market shares during the period, now accounting collectively for 11.7% of the grocery market.  Sales growth of 15% made Lidl the fastest growing retailer, increasing its share of the market by 0.5 percentage points to 4.9%.  Meanwhile, Aldi grew sales by 14.3%, taking its share to 6.8%.  Kantar Worldpanel said that an ongoing programme of store openings by both retailers meant that the two together attracted an additional 1.1 million shoppers over the past three months.

Morrisons was the only one of the big four to grow sales over the period, up 0.3%.  However, strong performances in produce and chilled convenience weren’t enough to stop the chain’s market share slipping by 0.1 percentage points to 10.4%.

Sales at Tesco fell 0.4% overall, although Kantar Worldpanel said that growth in the retailer’s own label Farm Brands remained impressive one year after launch: 64% of Tesco shoppers made a purchase from the line during the past 12 weeks.  Despite success in this area, Tesco’s market share fell by 0.5 percentage points to 27.6%.

Asda continued to show signs of improvement with its sales falling only 1.8%, while Sainsbury’s declined by 0.7%.

Iceland posted its strongest sales growth since March 2013 – up 9.8% year on year – thanks in large part to its fresh and chilled lines.  These products now account for more than a quarter of sales at the retailer, as Iceland moves beyond its traditional focus on just frozen foods.

The Co-op enjoyed its 23rd consecutive period of growth, increasing sales by 0.8% year on year.  Meanwhile, Waitrose – up by 0.3% – welcomed an even longer run of success.  With its market share now standing at 5.1%, the retailer has seen unbroken growth since March 2009, when it held just 4.0% of the grocery market.  Both grocers were bolstered by success in premium own label: the Irresistible and Waitrose 1 ranges were the fastest-growing lines within each business during the past 12 weeks.

Meanwhile, inflation showed no signs of abating with Kantar Worldpanel’s analysis showing the price of everyday goods was up by 2.3% compared to this time last year – an acceleration from the 1.4% figure recorded last month.  Rising prices in categories such as butter, fish, tea and skincare were partially offset by falling prices in categories including crisps, bacon, chocolate and fresh poultry.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, commented: “We expect inflation to continue to accelerate, and as a result we’re likely to see consumers looking for cheaper alternatives.  A reduction in promotional activity means the proportion of spending on promotions now stands at just 32.9% – 5.5 percentage points lower than last year.  As a result, offers are becoming a less significant option for shoppers looking to save money.  Already taking market share from their branded rivals – and up nearly 5% during the past 12 weeks – own label lines could be among the main beneficiaries of inflationary pressure.”

Meanwhile, despite rising prices, Kantar Worldpanel highlighted that the healthy eating trend continued to build a head of steam, perhaps buoyed after the gluttony of the festive period and before the temptation of Easter. McKevitt said that greater demand for gluten or dairy-free products, particularly from younger shoppers, had boosted the ‘free from’ category by 36% year on year.  In fact, 54% of the population purchased a ‘free from’ product during the past three months – that’s 3.3 million more people than last year.