Tesco returns to growth, but market share dips

By Rod Addy

- Last updated on GMT

According to Kantar Worldpanel figures, Tesco has returned to growth
According to Kantar Worldpanel figures, Tesco has returned to growth

Related tags Wal-mart Supermarket Lidl

Tesco’s sales are rising again as growth in UK grocery sales speeds up, but its market share is still falling, according to Kantar Worldpanel.

“Tesco returned to growth for the first time since January 2014, increasing sales by 0.3% compared to this time last year,”​ said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, commenting on sales for the 12 weeks ending February 1 2015.

“Britain’s largest retailer is bouncing back from a tough year, with Dave Lewis’s efforts to overhaul the supermarket attracting an additional 236,000 shoppers into its stores in the last 12 weeks.”

However, he added: “Despite the increase in sales, Tesco’s overall market share fell to 29%, down by 0.2 percentage points compared to last year.”

McKevitt said the latest figures for the grocery market, published on February 10 showed the growth rates of discounters Aldi and Lidl were slowing. “Early results suggest that discounters Aldi and Lidl will find their accelerated growth levels hard to match in 2015.

‘Aldi’s growth still impressive’

“Aldi’s growth of 21.2% is still impressive but a relative slowing from its 36% peak in April 2014. Likewise, Lidl’s maximum growth of 24% in May last year is now down to 14.2%.”

Despite this, both chains continued to grab share from other retailers, with Aldi’s share rising by 0.8 percentage points and Lidl’s by 0.4 percentage points respectively to 4.9% and 3.5%.

Asda had reclaimed the title of second largest retailer during the period, with 16.9% of the market, overtaking Sainsbury, which traditionally performed more strongly at Christmas than the rest of the year, said McKevitt.

However, Asda’s sales still fell over the 12 weeks by 1.7%, while Sainsbury’s sales dropped by 1.0%. Morrisons’ sales fell by 0.4%, the best performance from the Bradford-based retailer since December 2013, according to the data. Sales for Waitrose rose by 7.2%, taking its overall share to 5.2%.

The overall grocery market had grown by 1.1%, the fastest rate since June 2014, McKevitt claimed. “Shoppers are taking advantage of both lower fuel prices and the continuing price war among the supermarkets to slightly increase their grocery spending.”

Grocery inflation

However, grocery inflation had seen its 17th successive fall and now stood at -1.2%*, saving shoppers £327M over the past 12 weeks.

As a result, consumers were now paying less for a representative basket of groceries than they did in 2014, according to the Kantar Worldpanel figures.

The latest BRC-KPMG retail sales monitor figures indicated like-for-like food sales had kept falling over three months, incorporating modest deflation of 1.8%, and non-food sales had out-performed food.

Commenting on that data, Clive Black, director and head of research at Shore Capital, said: “Against especially favourable comparatives we welcome the return to a stronger run-rate from the grocers …

“We will watch with interest to see where the consumer spends their new found ‘dosh’ … but we tend to believe that it will be broadly applied between affordable treats in the leisure and low ticket non-food segments (accessories and apparel), maybe some trading up in food and homewares albeit the housing market is plateauing a little.”

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