21st Oct 2014 09:00
LONDON (Alliance News) - The UK's listed supermarket chains continued to lose sales and market share in recent weeks, as the so-called "heavy discounters" and upmarket grocers took a bigger slice of the UK grocery market, according to the latest figures from Kantar Worldpanel Tuesday.
As the supermarket price war heats up, the big four - Tesco PLC, J Sainsbury PLC, Wm Morrisons Supermarkets PLC and Asda, owned by US retail giant Wal-Mart Stores Inc - continue to compete on price, with each grocer unleashing individual price investments, including price cuts, loyalty cards and brand rice matching.
"We are seeing clear polarisation of the market with both the premium and discount ends of the market gaining share, while the mainstream grocers continue to be squeezed in the middle," said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
Tesco's market share in the 12 weeks to October 12 slid to 28.8%, down from 30.1% a year earlier, while its sales fell by 3.6% in the period. However, its market share was unchanged from the previous 12 week period, and its sales decline slowed.
"Tesco is yet to see substantial improvement, however it seems it may be turning a corner as sales are down 3.6%, which is the grocer?s best figure posted since June," said McKevitt.
Sainsbury's and Morrison's sales slipped back, down 3.1% and 1.8%, respectively. Sainsbury's shares of the market fell to 16.1% in the 12 weeks period, down from 16.7% last year, while Morrison's slice of the market pared-back to 11%, from 11.2% the prior year.
"Asda has again emerged as the winner among the big four, growing sales ahead of the market, up 1% over the past year, boosting its share to 17.3%," said McKevitt.
The data shows Waitrose posting a record market share of 5.2%, increasing its sales by 6.8% over the past year.
Aldi and Lidl continued to grow ahead of the market, holding market shares of 4.8% and 3.5% respectively.
"While price is a key battle ground among the big four, at the top end of the market Waitrose secured a record grocery market share of 5.2%. Meanwhile at the opposite end of the market, Aldi?s growth slowed slightly compared to recent months, but sales were still up 27% versus last year resulting in a market share of 4.8%. Lidl?s sales grew by 18%, with its market share standing at 3.5%," said McKevitt.
The data from market researcher Kantar Worldpanel showed that overall grocery market prices continued to contract, shrinking 0.2% in the 12 week period, a thirteenth successive fall.
"This means shoppers are now paying less for a representative basket of groceries than they did in 2013. This is another record low... and reflects the impact of Aldi and Lidl and the market?s competitive response, as well as deflation in some major categories including vegetables and milk," said McKevitt.
Last week, rating agency Moody's published a report stating that it expects operating profit margins of the big four UK grocery retailers to likely shrink further over the next 12 to 18 months, as they cut prices to reverse declining sales and curb the market share losses to discounters.
"Further price cuts could be particularly credit negative for Tesco and Morrison as their cost-cutting and efficiency measures are unlikely to fully offset the negative impact of lower prices on their margins," said Moody?s vice president Sven Reinke.
However, Moody's notes that Morrisons is in a better position than Tesco and Sainsbury's to adapt to the change in shopping habits, as its store network comprises smaller supermarkets than its rivals.
Moody's said the combined market share of discounters Aldi and Lidl could reach 10% over the next couple of years, up from their current shares of 8.3%.
Tesco shares were up 1.8% at 182.55 pence Tuesday morning, while Sainsbury's was up 0.5% at 243.90 pence and Morrisons was up 1.0% at 161.44 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
TescoSainsbury's