TOP NEWS: UK Groceries Sales Flat As Weather, Price Levels Disappoint

(Alliance News) - The UK grocery market was flat in the past three months due to "tough" comparatives with last year's hot summer, a survey by Kantar Worldpanel showed on Tuesday.

In the 12 weeks to August 11, supermarket sales were flat compared to a year before, Kantar said, as July's hottest day on record in the UK wasn't enough to shift the market into growth.

"The memory of last year still looms large for retailers, and this summer's comparatively poor weather, combined with low levels of like-for-like price rises, have made growth hard to find for retailers," said Fraser McKevitt, head of Retail & Consumer Insight at Kantar Worldpanel.

Ocado Group PLC claimed the top spot as the UK's fastest growing grocer, increasing sales by 13% during the period. The online retailer increased its shopper base by 7% and encouraged its customers to spend GBP1.93 more each delivery, Kantar noted.

Ocado and Marks & Spencer Group PLC entered into a 50-50 joint venture in February, trading as Ocado.com, which combined M&S-branded food and beverage with Ocado's own-label and third-party products. Since then, Ocado's market share improved by 0.2 percentage point to 1.4%, while it commands 18% of all online supermarket sales.

Meanwhile, J Sainsbury PLC accounted for 15.4% of all UK supermarket sales during the 12-week period. Overall Sainsbury's sales fell by 0.6%, however, despite sales of branded goods rising by 1.5%, driven by higher levels of promotion and Sainsbury's price lockdown strategy.

"While each of the big four lost share, Sainsbury's will be cheered to be the strongest performer among this cohort for the first time since November 2017," highlighted McKevitt.

Sales of the UK's largest grocer, Tesco PLC, and those of smaller peer Walmart Inc-owned Asda shrunk by 1.6% and 1.5%, respectively. Kantar said Asda's online growth of 11% was "notably" strong, while Tesco continued to find success with its cheapest own-label lines.

"In fact, total sales of Tesco's value tier were GBP29 million higher than this time last year," noted McKevitt.

Tesco and Asda's market share declined by 0.4 point to 27.0% and by 0.3 point to 14.9%, respectively.

WM Morrison Supermarkets PLC increased its level of promotion after its overall sales fell by 2.7% in the period. A reduction in the number of items bought per trip contributed to this decline, Kantar said, and Morrison's market share fell to 10.1% during the past 12 weeks.

Turning to non-listed grocers, Lidl's sales increased by 7.7% and the discounter reached a record market share of 5.9% during the past 12 weeks. Kantar said Lidl's raft of new store openings has helped it attract 489,000 additional shoppers this period.

Lidl's campaign to encourage people to do their main weekly shop is making an impact and the average basket spend is now nearly GBP19% higher than last year, though still significantly lower than the GBP22.65 average spend at the big four.

Meanwhile, sales at rival Aldi increased by 6.2%, supported by sales of bakery products, up 11%, and biscuits, up 13%.

"Nearly half of all households shopped in an Aldi during the past 12 weeks, showing the extent to which the discounter has established itself in our retail landscape – this figure increases even further to 58.4% in the north of England where the retailer is most popular," said McKevitt.

In a tough market, Co-op also found growth: sales were 0.2% higher compared with a year ago. Its new high-profile GBP3.50 burger and beer deal, which encourages shoppers to opt for barbecue favourites despite the sometimes-poor weather, has helped bring customers into its stores more often, Kantar noted.

Waitrose's market share decreased by 0.1 percentage point to 4.9% and sales declined by 1.8%.

Iceland's market share held steady at 2.1%, with sales down by 0.4% during the past 12 weeks.

UK grocery inflation for the period was 0.9%, Kantar said, with shoppers now paying more for a representative basket of groceries than they did between 2014 and 2016. Prices have been rising since the 12 weeks to 1 January 2017, Kantar noted. Higher prices reflect inflation in some major categories including crisps, canned fish and frozen fish.