This summer’s good weather has had a positive effect on the troubled UK grocery market, causing the sector to grow by 0.3 percent, according to the latest figures from Kantar Worldpanel.
The figures, which represent the 12 weeks ending 14 August 2016, showed a the fastest acceleration of sales since March 2016 but a surprising disinterest in customer promotions. Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said:
“Only 37.7 percent of grocery sales were bought on any kind of promotion this period – a significant decrease from highs of over 40 percent we were seeing in 2015.”
In terms of inflation, Brexit seems to have had little effect so far. Grocery price inflation has remained negative, with a representative basket of goods 1.3 percent cheaper than it was last year.
Budget supermarkets have maintained the upper hand in the market over the past 12 weeks, continually beating larger supermarkets with cheaper prices and an increasingly large selection of goods. Lidl was the fastest growing supermarket, with sales up 12.2 percent, followed by Aldi at 10.4 percent.This is in sharp comparison to the falling sales of the traditional ‘Big Four’ supermarkets, with Tesco’s (LON:TSCO) declining by 0.4 percent – albeit its slowest rate of decline in six months, suggesting new strategy may be beginning to pay off.
McKevitt commented: “Current trends suggest the retailer may return to growth this year, which would mark the end of a decline stretching back to March 2015. Tesco’s recent product launches have been making a positive impact on its performance, with its ‘Farm brands’ finding their way into over a quarter of the Tesco baskets this period.”
Waitrose has strong success over the last 12 weeks, with sales rising by 1.4 percent and maintaining its 5.1 percent slice of the market. However, other supermarkets disappointed; Sainsbury’s (LON:SBRY) saw sales fall by by 0.6% and Morrisons (LON:MRW) by 1.8 percent, despite bringing in a new CEO last year to implement a turnaround plan. Both retailers saw market share fall to 16.1 percent and 10.6 percent respectively. Asda suffered the biggest sales drop of the Big Four, down 5.5 percent.