28th Jun 2016 07:35
LONDON (Alliance News) - The UK grocery market slipped into its first sales decline since January in the latest set of sales data released by Kantar Worldpanel on Tuesday.
In the 12 weeks ended June 19, UK supermarket sales fell by 0.2% year-on-year as like-for-like grocery prices declined by 1.4%.
Kantar Head of Retail and Consumer Insight Fraser McKevitt noted that while the figures pre-date last week's European Union referendum result, the resulting immediate economic uncertainty is unlikely to cause a substantial fall in grocery volumes, as demonstrated by the 2008 financial crisis "when basic food, drinks and household sales proved resilient".
However, McKevitt noted that with an estimated 40% of the food Britons consume sourced from overseas, any long-term change in exchange rates may threaten the current period of cheaper groceries.
"Historically, higher prices have led to consumers looking for less-expensive alternatives such as own-label products, seeking out brands on promotion or visiting cheaper retailers," McKevitt said.
In the 12 weeks, Tesco PLC showed the slowest sales decline among the big four grocers for the second consecutive period, with sales falling by 1.3% year-on-year, while its market share dipped to 28.2% from 28.6%.
J Sainsbury PLC came in second place among the big four with a sales decline of 1.4%. Its market share slipped to 16.3% from 16.5%. Wm Morrisons Supermarkets PLC saw its sales fall by 2.4%, as its market share declined to 10.8% from 11.0%.
The worst performer among the big four was once again Asda Ltd, which is owned by the US's Wal-Mart Stores Inc. Asda's sales dropped by 5.9% while its market share fell to 15.6% from 16.5%.
German discounters Aldi and Lidl, meanwhile, continued to achieve good sales growth. Aldi's sales were up by 11.5% and Lidl's sales increased by 13.8%. Their combined market share hit a record high of 10.5%. McKevitt said around 58% of Britons visited one of the two discounters in the past 12 weeks.
Upmarket grocer Waitrose, which is owned by the John Lewis Partnership, achieved 1.3% annual sales growth, and its market share increased slightly to 5.2% from 5.1%. McKevitt said sales were boosted by the premium Waitrose 1 brand, giving the grocer an unbroken period of growth dating back to 2009, which is "the best run of any retailer outside the discounters", according to the Kantar analyst.
Other smaller retailers Iceland and The Co-Operative also saw sales growth of 3.5% and 2.0%, respectively.
UK grocery deflation now stands at 1.4%, meaning shoppers are now paying less for a representative basket of groceries than they did in 2015, Kantar said. This is the 23rd consecutive period of grocery price deflation, with falling prices reflecting the impact of Aldi and Lidl and the market's competitive response to them, as well as deflation in some major categories such as bacon, butter and detergents.
Shares in Tesco were trading up 3.4% at 158.80 pence on Tuesday morning, while Sainsbury's shares were up 2.5% at 223.30p and Morrisons shares were up 2.6% at 179.20p.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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