Credit: Lewis Clarke/Geograph

The supermarket price war shows no sign of slowing

Food prices fell by 1.7% year-on year in the last three months, as Aldi and Lidl continued to surge.

by Jack Torrance
Last Updated: 26 Nov 2015

Fresh supermarket sales figures out today paint a familiar picture. Under threat from the German discount supermarkets, the industry’s big players have been slashing costs – leading to a 1.7% year-on-year fall in food prices in the twelve weeks to October 11.

The tactic doesn’t seem to have done the job. Aldi’s sales were up by 17.6% to around £1.4bn in the period, while Lidl’s leapt by an impressive 17.9% to just over £1bn, according to Kantar Worldpanel. Between them, the discount chains now represent almost 10% of the entire market.

Of the ‘Big Four’ grocers, just Sainsbury’s was growing - and by a comparatively feeble 1.1%. Sales at Morrisons were down 1%, Tesco’s dipped by 1.7%, and the situation looks particularly drastic for Asda, where sales were down by 3%.

‘With like-for-like grocery prices 1.7% lower than last year, the supermarket price war shows no signs of abating,’ said Fraser McKevitt, Kantar Worldpanel’s head of retail and consumer insight. ‘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%.’

Though there will surely come a point when continuing to slash prices is no longer a viable strategy for the Big Four, it’s not clear then that will be. Tesco upped the ante last week with a new promise to instantly match its competitors’ prices for branded goods at the checkouts. With Amazon Fresh on the way, it looks like the supermarkets’ woes are far from over.

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