Big four all suffer decline in sales as discounters roll on

Kantar Worldpanel said Bradford-based Morrisons was the second worst performer with sales down 2.6 per cent, but this reflects the closure of unprofitable stores.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said there are signs that Morrisons’ recovery is gaining pace as it suffered the smallest market share loss, down from a share of 10.9 per cent in 2015 to 10.6 per cent. Leeds-based Asda’s share fell from 16.9 per cent to 16.0 per cent.

The big four, which include market leader Tesco and number two player Sainsbury’s, are all losing sales to German discounters Aldi and Lidl.

Lidl is now Britain’s fastest growing supermarket with sales up 15.4 per cent, while sales at bigger rival Aldi rose 12.5 per cent.

Morrisons’ chief executive David Potts is attempting to return the much loved Yorkshire retailer to its roots as a value grocer, offering quality food at low prices. He has closed unprofitable stores, reduced head office managers, increased store colleagues and cut prices.

“There are signs that Morrisons is turning in the right direction” said Mr McKevitt.

“They will look to online where they are doing very well. People in the North have a soft spot for Morrisons. It is held in very high affection.”

Asda’s sales fall continues a long spell of weaker trading.

“Asda are losing customers at quite a rate,” said Mr McKevitt.

“The winds are against them. People are shopping less in bigger stores and Asda is mainly bigger stores. Their share has come down quite sharply as they used to be the number two player.

“They need to do something to stabilise and get back on track. Maybe they need to enter a new kind of channel.”

Sainsbury’s hopes to enter a new channel with a £1.4bn takeover of Argos owner Home Retail. Sainsbury’s believes Argos will boost its growth by creating Britain’s largest general merchandise retailer and by expanding its online presence.

The Kantar Worldpanel data showed that Tesco’s sales fell 1.3 per cent, ending four months of improvement, while Sainsbury’s saw a fall of 0.4 per cent. The fall in sales at Sainsbury’s was the first since July last year.

“This marks the first time that each of the big four has simultaneously witnessed a drop in sales since April 2015,” said Mr McKevitt.

One bright spot was the Co-operative, which increased sales by 3.3 per cent year on year, taking its market share to 6.2 per cent as refurbished stores and an improved range encouraged shoppers to visit and spend more.

The Co-op is selling off larger stores to focus on convenience and cheaper prices are luring in shoppers who want a top up rather than a full weekly shop.

Waitrose’s market share also increased, to 5.2 per cent, but the discounters maintained the record share high of 10.4 per cent.

Consumers are enjoying a “golden period” of cheaper groceries with like-for-like prices falling every month since September 2014, according to Kantar Worldpanel.

“Nearly two years of falling prices mean the average household is spending £78.10 a week in the supermarket, so consumers have annually saved more than £400 than if prices had risen at the same rate as the last decade,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

He said the overall market volume growth of one per cent is in line with Britain’s increased population.

“Individual households have stopped increasing the amount of groceries they buy and, while it is tempting to correlate lower volumes with the uncertainty surrounding the EU referendum, there is no evidence that supermarket purchasing has any significant link with consumer confidence,” he said.

Figures from Neilsen show that spending on groceries on offer has dropped to its lowest level in seven years as supermarkets take on the discounters with permanent price cuts. Just 29 per cent of supermarket spending in April went on products with temporary price cuts or multi-buy offers, the lowest level since 2009. The shift follows supermarkets turning to permanent price cuts to take on the might of discounters such as Aldi and Lidl. Nearly half of all households now shop at a discounter every month, up from 40 per cent two years ago.

Mike Watkins, Nielsen’s UK head of retailer and business insight, said: “To help combat the rise of the discounters, supermarkets are now turning temporary price reductions into permanent cuts.”