The nation’s supermarkets have taken a battering not unlike that dealt out by Storm Imogen, but there might be a glimmer light at the end of the tunnel. At least for some.
The latest grocery market figures from Kantar Worldpanel for the 12 weeks ending 31 January reflect a – whisper it quietly – slow return to growth, with sales inching up 0.2%. Not mind-blowing but considering everyone from Tesco to Morrisons has been bruised by an exhausting price-war in an effort to hold onto market share, it’s pretty good news.
A surprise winner in the battle for customers was the Co-operative, which recorded the fastest growth out of all the non-discounters (up 1.4%). Its own-label sales rose by 7% (boosted by a New Year kick for fresh food), while it’s also the most frequently visited major supermarket – customers shopped there an average of almost 19 times over the past 12 weeks, compared with a market average of 11 visits. The retailer has 2,800 shops and 2,200 of those are classed as convenience stores.
There was also a solid showing from Sainsbury's – its sales increased for the sixth period on the trot and its market share rose 0.1% to 16.8%. A return to form for the supermarket – maybe Mog had more of an impact than was first thought...
Its 0.6% growth outstripped even Waitrose’s, which rose 0.1% marking the 91st consecutive period of growth. Even so, that's not a great outlook for Waitrose – it's already a considerable drop from the 1.5% increase it had in the last three-month period and considering it was regularly posting growth of around 5% in recent times, the upmarket retailer might be struggling to keep out of the price wars.
Tesco and Morrisons also recorded underwhelming numbers – revenues fell by 1.6% and 2.2% respectively, though the silver lining (if you can just about call it that) was that Tesco’s numbers are the best it has posted since September 2015 and it is still the market leader of course. Morrisons' sale decline lessened, but its market share still fell 0.3% to 10.8%. Things continue to look bleak for Asda too as sales were down 3.8%.
Aldi and Lidl’s quest to conquer the Big Four marches on – both discounters’ growth accelerated, Lidl’s to 18.7% and Aldi’s to 13.7%. Their share of the market increased by 0.7% each (Lidl’s up to 4.2% and Aldi’s to 5.6%), though it was a slight dip from the 10% high they achieved at the end of 2015. Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said there’s probably more pain to come for the big supermarkets though. ‘We can expect both retailers to continue to take market share this year as they fulfil their plans for more outlets,’ he said.
The rise in sales overall is a brief moment of respite for the grocery sector, though it was driven by health-conscious consumers turning over a new leaf for the New Year – fruit and vegetables grew well ahead of the market at 5%. McKevitt said, ‘Given that they’re still experiencing like-for-like deflation it’s a significant revenue growth for both categories.’
The problem with health kicks of course, is that they’re often fleeting. When consumers' taste for kale and courgettes starts to drop off, the supermarkets will need to have other strategies other than price-cutting lined up to swing the momentum away from the discounters.