The big four are investing billions of pounds in price cuts, but Aldi and Lidl are enjoying stellar sales increases after 56 per cent of British households visited an Aldi or Lidl over the past 12 weeks.
The latest market share figures from Kantar Worldpanel showed that Leeds-based Asda was the worst performing food retailer, with sales falling 2.9 per cent over the 12 weeks to September 13.
Sales at Bradford-based Morrisons fell 1.4 per cent and Kantar warned this is likely to get worse in the coming months as the recently announced store closures take effect.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “There are no signs of recovery at Morrisons.
“Shopper numbers are falling and they are likely to continue to fall following the 11 store closure and the sale of the M Locals.
“One bright spot is online is growing.”
Morrisons’ market share fell from 10.9 per cent to 10.7 per cent.
Analyst Bruno Monteyne at Bernstein said: “We think Morrisons is in a strategically difficult spot as they have both the biggest geographic and consumer overlap with the other value retailers (Aldi, Lidl, Asda) and will find it hard to
differentiate against them.”
Asda retained its number two slot, but Kantar expects that Sainsbury’s will steal it back in the run up to Christmas.
“The fact that Asda don’t have convenience stores is hitting revenues,” said Mr McKevitt, who expects the grocer to carry out a review of its own label products to see whether they are competing well enough against Aldi and Lidl.
Asda’s market share fell from 17.3 per cent to 16.7 per cent.
In stark contrast the German discounters are gaining market share with Aldi’ sales rising 17.3 per cent to give it a 5.6 per cent share of the market.
Lidl sales rose 16.0 per cent to give it a new market share high of 4.2 per cent.
Lidl’s growth follows the success of its £20m “Lidl surprises” TV and print advertising campaign, aimed at persuading middle class shoppers that it sells quality products.
“This is part of Lidl’s longer term move to lose the discounter tag and become a mainstream supermarket,” said Mr McKevitt.
“They will never lose the focus on price but they’re adding a lot to it. The marketing is about the quality of the food not just the price.”
He added that more people are now doing their weekly shop at Lidl.
In contrast Aldi has maintained its focus on price and Mr McKevitt said this could be due to Aldi’s bias to the north and Lidl’s to the south.
Sainsbury’s southern heartlands helped it produce the only positive sales performance out of the big four.
Sales at Sainsbury’s rose 0.9 per cent after it attracted 250,000 new shoppers through its doors.
“Sainsbury’s seems to be doing well,” said Mr McKevitt.
“It’s sticking to what it’s well known for and recent marketing has been about its food. It’s also been helped by a better grocery performance in London.”
Sainsbury’s is also seeing strong clothing sales as it plays catch up with rivals Tesco and Asda. General merchandise sales have not been hit by deflation as much as food sales.
Its market share stayed flat at 16.2 per cent.
Mr Monteyne said: “This is another good set of Kantar numbers for Sainsbury’s.
“They top the year on year till roll growth on a 12 and four week basis and show no market share losses compared to the rest of the big four who all lose market share year on year.
“Sainsbury’s keeps delivering on all measures through its better quality credentials, better run stores and better growth channel mix.”
Tesco, Britain’s biggest supermarket, saw sales slide one per cent as its market share fell by 0.6 per cent to 28.2 per cent.
Mr Monteyne said: “Beneath the surface of this ‘market share decline’ for Tesco, we point at the material price cuts that Tesco has made above and beyond the market’s pricing. Tesco also showed at the first quarter that its like-for-like performance was better than what Kantar numbers might have indicated.”
The grocery price war stalled market growth, leaving it static at 0.9 per cent - the sixth consecutive month that sales have grown by less than one per cent.
Iceland, Waitrose and the Co-operative saw sales growth of 3.4 per cent, 2.9 per cent and one per cent respectively.
With shoppers moving their custom away from the traditional, larger-size supermarket stores, online sales are continuing to boom and were up 12 per cent.
“Almost seven per cent of grocery sales are currently purchased through the internet and existing online supermarkets will be watching closely to see when Amazon Fresh will launch in the UK and whether it will steal market share or grow the online market even further,” said Mr McKevitt.