Shopper the price war winner

A typical basket of everyday items is now 2.1 per cent cheaper than it was in 2014.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “This is good news for consumers, saving the average household £20 in the last three months.

“But many of the country’s largest grocers have struggled to enjoy substantial growth, with lower prices taking £532m out of supermarket tills.”

An increase in shoppers through the door boosted Sainsbury’s, which was the strongest performer among the big four, despite a 0.2 per cent fall in sales. Growing slightly behind the market, its share now stands at 16.5, down 0.1 percentage points on last year.

Leeds-based Asda was the worst performer, down 2.2 per cent as its market share fell from 17.3 per cent to 16.9 per cent.

Asda is suffering from Tesco’s renaissance under new chief executive Dave Lewis. The number two player always tends to get hit the hardest when the number one player recovers lost ground.

“These are tough times,” said Mr McKevitt.

“Tesco has done a little bit better, hitting Asda hard. Sainsbury’s and Tesco are still opening convenience stores so they have extra shoppers in stores. Asda has not got that to call upon.”

He added that Asda is now focusing on cutting prices rather than sticking to a round pound format.

“That’s taking money out of Asda’s tills and we’re not seeing a corresponding rise in to tills. It hasn’t brought shoppers through the door.

“They need to look at convenience - do they want to play?”

German discounters Aldi and Lidl continue to be the fastest growing retailers, up 15.1 per cent and 10.1 per cent respectively.

Both were rewarded with new record high market shares: 5.4 per cent for Aldi and 3.8 per cent for Lidl.

Sales at Morrisons fell 1.1 per cent on a year ago and its market share fell from 11.0 per cent to 10.9 per cent.

“Things are really tough for Morrisons,” said Mr McKevitt.

“It’s been good news on the new CEO (David Potts). He’s done some sensible things. He removed the expensive spray machines that cost a lot and he’s putting people back on the check-out, which has chimed with the older shopper. He’s got to stabilise the ship and work out where growth is coming from.”

Analyst Bruno Monteyne at Bernstein said: “Morrisons showed its best market share performance (-0.1 per cent) since March 2012, but aided by easier comparatives. It is still losing on a two year basis.”

Tesco’s sales dipped 1.0 per cent and its market share fell from 28.8 per cent to 28.4 per cent.

“Tesco are further along the road than Morrisons,” said Mr McKevitt.

“They’re getting more shoppers through the door. They’ve stopped the rot but they need to know what the next big idea is. They need to rediscover that innovative streak.”

Kantar said the industry wide price cuts were down to falling commodity prices and the ongoing supermarket price war, with all major retailers offering cheaper like-for-like goods.

Talking about the rise of the German discounters, which now have a 9.2 per cent joint market share, Mr McKevitt said: “While such growth is the envy of the industry it is slower than in recent months, suggesting the discounter momentum is starting to slow a little.

“Aldi and Lidl are opening stores, but they’re not immune from the effect of price deflation.”

Apart from the discounters only Waitrose saw an increase in sales, up 1.5 per cent.

The upmarket retailer’s market share stayed stable at 5.1 per cent.

The Co-operative saw sales fall by 1.0 per cent but did slightly increase footfall, as the business tries to exit larger format supermarkets to concentrate on its convenience business.

The Co-op’s market share fell from 6.1 per cent to 6.0 per cent.

Iceland’s share stayed flat at 2.1 per cent and sales were also flat.

Other multiples such as Costcutter and Spar saw sales fall by 0.8 per cent and market share remained flat at 2.9 per cent.