Big four supermarkets see best growth in four years

Morrisons is enjoying a renaissance under CEO David Potts
Morrisons is enjoying a renaissance under CEO David Potts
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All four of Britain’s biggest grocers managed to increase sales for the fifth consecutive period, a run of collective success not seen since 2013​, according to the latest data from Kantar Worldpanel​.

However, this period of sustained growth hasn’t been enough to offset pressure from the discounters. Kantar said the big four now account for just 69​ per cent​ of the UK grocery market – down from 76​ per cent​ five years ago – and the figure looks set to fall further in the coming months.​ ​

Morrisons increased sales by 2.6​ per cent​ ​over the 12 weeks to August 13, which was the ninth consecutive period of growth for the Bradford-based supermarket. Morrisons’ online business is performing particularly well​ and​ the retailer continues to increase its share of the online grocery market, attracting more shoppers as it expands its delivery service to new parts of the UK.

​Fraser McKevitt, head of retailer and consumer insight at Kantar Worldpanel, said: "This is really positive news from Morrisons. They have really turned around the business.

"Half on the growth is coming from online as it prepares to roll the service out in the North East. The other half is coming from the stores."

Rival Asda's sales rose 1.4 per cent during the quarter as the Leeds-based grocer continues its turnaround under CEO Sean Clarke.

"This marks a period of growth for Asda after many years of decline," said Mr McKevitt.

"Asda is seeing own label growth on both cheap lines and premium. Fresh and chilled sales, which are really critical, are also improving.

“After a difficult couple of years, Asda has managed to continue the run of positive sales performance which began in April this year.

​"​This follows the retailer’s recent announcement of a return to like-for-like sales growth, suggesting Asda is asserting its recovery across the board. Own label has been important to the grocer’s turnaround, providing a boost from both ends of the price spectrum: the value ‘Farm Stores’ and premium ‘Extra Special’ lines both saw double-digit growth during the past 12 weeks.”

Elsewhere, the data showed that Lidl has overtaken Waitrose to become the UK's seventh largest supermarket as shoppers cope with inflation by turning to the discounters.

The German retailer increased its market share to a record high of 5.2​ per cent​ ​​over the 12 weeks to August 13 as 10 million households visited its expanding network of stores.

It increased sales by 18.9​ per cent​ overall, with alcohol and fresh produce performing particularly well.

Aldi was not far behind with sales growth of 17.2​ per cent​, attracting 1.1 million more shoppers than this time last year and increasing market share to 7​ per cent​.

The discounters' success coincides with like-for-like grocery inflation increasing slightly to 3.3​ per cent​ after holding steady at 3.2​ per cent​ for the past two months.

At the current rate, price increases could add a further £138 to the average household's annual grocery bill, with the price of butter and fish most affected, Kantar said.

M​r McKevitt said that while consumers are concerned about the Brexit negotiations, the grocery sector should withstand any future shocks.

"No-one can predict what will happen in the Brexit negotiations," he said.

"Consumers are worried about Brexit and that inflation is outpacing wage growth, but grocery tends to be fairly resilient.

"If people are not eating out, they want to treat themselves. It's the premium part of own label that is growing."

Overall supermarket sales ​rose​ 4​ per cent​ year on year, although the disappointing summer weather saw sales of ice cream ​fall by 9​ per cent​ and burger​ sale​s slump​ed 25​ per cent​ - an £8​m loss year on year​ as rain dampened the nation’s appetite for barbecues.

"​Over the last four weeks, discretionary purchases have been hit," said Mr McKevitt.

​"In contrast, sausages managed to escape the summer downturn thanks to a growing taste for posh bangers​. A third of those purchased during the month were from premium own label lines, as retailers persuaded shoppers that sausages should be enjoyed beyond the barbecue.”

Tesco saw overall sales grow by 3​ per cent​ and Sainsbury's sales rose by 2​ per cent.

Waitrose increased sales by 2.8​ per cent​ year on year, continuing an unbroken run of growth since March 2009, but the Co-op's sales declined by 0.4​ per cent​​.​ This dip is partly attributable to the ​Co-op’s sale of nearly 300 of its stores to convenience chain McColl’s.