Flat sales in past quarter as grocers struggle on

By Rod Addy

- Last updated on GMT

Related tags Supermarket

Pressure from Aldi and Lidl continues to drive traditional supermarkets to cut food prices
Pressure from Aldi and Lidl continues to drive traditional supermarkets to cut food prices
Grocery sales remained “in the doldrums” from February to April, according to leading food analyst Clive Black of Shore Capital, citing data from the British Retail Consortium (BRC) and accountants KPMG.

The Retail Sales Monitor figures​ showed like-for-like grocery sales fell by 2.2%, driven by less food waste in the home, smaller basket shops and increasing levels of people eating out, rather than cooking at home, Black said.

Total grocery sales were virtually flat, rising just 0.3% over the quarter, although numbers indicated​ that April brought the first positive like-for-like sales since July last year.

“The grocery sector remains firmly in the doldrums with total sales barely ahead over the three month period,”​ said Black.

Falling prices

Pressure from discounters Aldi and Lidl had led to supermarket chains Morrisons and Asda in particular focusing more on value, potentially leading to falling prices without an expectation of growing sales volumes, he added.

“For the supermarkets the dominant theme is pricing in core grocery, the nature and extent of which has yet to pan out for investors with any improvement in non-food sales not yet registering on the P&L accounts.

“There will most probably be a day when we turn more positive on the supermarkets. However, that day is not expected in forthcoming weeks.”

David McCorquodale, head of retail, KPMG said: “The food sector remained competitive with grocers slashing prices to attract customers. The last three months' figures, which eliminate the distortion of Easter's timing, reveal that total food sales have been flat at best.

‘Re-think business models’

“Price wars may be good news for the consumers but mean that grocers have to urgently re-think business models to maintain margins.”

Commenting on the BRC-Nielsen shop price index for April last week, Shore Capital’s Darren Shirley, food, capital, production and procurement analyst, said food prices had shown the lowest rise since the survey began in 2006. They nudged up by just 0.7% year-on-year.

Fresh food prices barely increased, rising by just 0.4%, versus ambient food prices, which rose by 1.1%, according to these numbers.

It remained to be seen how the combination of steadily climbing commodity prices and price cutting drives by the major supermarkets would affect the market, said Shirley.

Related topics Ambient foods Fresh produce

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