Credit: Liz West/Flickr

Britain's big supermarkets could finally be bouncing back

Tesco, Morrisons and now Sainsbury's are growing again, even if Asda is letting the side down.

by Jack Torrance
Last Updated: 15 Mar 2016

It has been a difficult few years for Britain’s biggest supermarkets. There were signs they were going off the boil early in 2014 and when Tesco’s accounting scandal emerged in September that year, the proverbial really hit the fan.

A mixture of fearsome competition, falling global food prices and changing shopping habits forced all of them to tighten their belts, forgo profits, and shut stores (or at least cancel new ones in the works). Now it seems the grocery giants are getting back on their feet again.

Today Sainsbury’s announced its sales were up 1.2% in the nine weeks to 12 March and 0.1% on a like-for-like basis (which only includes sales at stores open more than one year). That might not sound like much of a boost but it's Sainsbury’s first quarter of same-store sales growth since 2013.

It follows a similar revival of fortunes for its fellow big four grocers Tesco (up by a surprise 2.1% in the six weeks to 9 January) and Morrisons, which reported a similarly modest 0.1% increase in the final quarter of last year. Things are looking remarkably less happy for Asda, the Walmart subsidiary, which last month reported its worst quarterly decline in like-for-like sales ever. Nonetheless the'Big Four's' performance is rather rosier than this time last year.  

It would be premature to declare a return to the ‘good old days’ though. German discounters Aldi and Lidl are an ever-present threat. The pair have made it clear they are intent on expanding and both continue to churn our double-digit rates of sales growth (13.3% for Aldi and 18.5% for Lidl, according to latest Kantar Worldpanel figures). And the Big Four are still stuck with massive, costly shops that look increasingly likely to be left obsolete by consumer shifts towards online shopping and convenience stores.

The growth figures aren’t exactly stunning and could be a blip. Plus revenue isn’t everything of course. Even if the Big Four have overcome their prolonged sales downturn, a price war of attrition has left their profit margins much thinner. They might have survived the assault of the discounters but the future of groceries looks less prosperous than it once was.

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