Figures published today (Tuesday October 20) for the 12 weeks ending October 11, 2015, show overall supermarket sales growth up by only 0.8% compared to a year ago.
Watch the video report from Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, here
Despite a more buoyant overall economy, supermarket revenue growth is merely shuffling along and has not reached above 1% since March.
McKevitt said: “With like-for-like grocery prices 1.7% lower than last year, the supermarket price war shows no signs of abating. Consumers have now enjoyed more than 12 months of continually falling prices and are currently pocketing these benefits rather than splashing out on substantially more grocery items, with overall volume growth of only 2%. This equates to £1.5 billion taken out of the market in the last year, saving each household £58 on average.”
Big Four performance
Only one of the big four enjoyed sales growth in the period and that was Sainsbury’s. Thanks to a good performance in its online business and at its Local stores, the chain was able to increase revenues by 1.1%, although market share was static at 16.1%.
At Asda sales dropped dramatically, by a full 3%, bringing its market share down by 0.7 percentage points to 16.6%.
And at Morrisons sales were down by 1.0%, taking share to 10.8%.
Online bucks the trend
Going against this overall market tendency, is the online grocery sector where sales have increased by 9.8% on the same period last year. Even better is that penetration of online shopping is at less than 20% so despite its rapid expansion, there is still space for retailers to increase both share and revenue.
“Internet sales offer a chance of long term growth,” said McKevitt. “Only 18% of households bought groceries online in the last 12 weeks meaning there’s plenty of space for further expansion. The convenience factor and minimum spend restrictions mean online baskets tend to be larger, averaging £67 in value, compared with £14 for the average bricks and mortar trip. Amazon Fresh’s expected full launch early next year could be a major disruptor, bringing down average basket sizes, accommodating on-demand shopping, and accelerating the growth of the whole online market.”
Discounters back on song
And after a slowdown earlier this year, the discounters are back on track and have both seen their rate of growth return to above 17% during this period. “For the second successive month Lidl has reached a new share high, now claiming 4.3% of the market and growth accelerating to 17.9%,” said McKevitt. “Growth was particularly strong in Scotland, the scene of its ‘smarter shopping’ card trial. It’s a similar story for Aldi, where revenues are up 17.6% on a year ago.”
Best of the rest
At the other end of the spectrum, there has been further success this period for up-market Waitrose, where sales have climbed by 2.1%. And the Co-operative, sales grew by 1.0% and has Iceland has now enjoyed a sixth month in a row of growth as it increased sales by 3.2%, benefitting from a wider range of premium products.
Meanwhile, Martin Lane of online personal-finance comparison site www.money.co.uk believes the retail battleground is going to get even more ferocious. He said: “With just a few weeks left until Christmas, supermarket price wars are only going to get more intense in the build up to the festive season. The good news is shoppers can cash in at the tills, but they need to be switched on.” He added that retailers are getting increasingly savvy around price promotions. “While greater competition for consumers’ cash means supermarkets are discounting prices left, right and centre, it also makes them smarter with their offers too, luring shoppers into spending more than they bargained for,” said Lane.
Take a look at a snapshot of the UK’s grocery market share for the latest 12-week period here.