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UK Consumers Reap the Benefits of Ongoing Grocery Price War

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UK Consumers Reap the Benefits of Ongoing Grocery Price War

UK Consumers Reap the Benefits of Ongoing Grocery Price War
October 22
10:54 2015

The latest UK grocery share figures from Kantar Worldpanel, published for the 12 weeks ending 11 October 2015, show overall supermarket sales growth up by only 0.8% compared to a year ago. Despite a more buoyant overall economy, supermarket revenue growth has not reached above 1% since March 2015.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “With like-for-like grocery prices 1.7% lower than last year, the supermarket price war shows no signs of abating. Consumers have now enjoyed more than 12 months of continually falling prices and are currently pocketing these benefits rather than splashing out on substantially more grocery items, with overall volume growth of only 2%. This equates to £1.5 billion taken out of the market in the last year, saving each household £58 on average.”

Sainsbury’s was the only one of the larger supermarkets to see sales growth this period, and a strong performance in its online and Local stores helped it to increase revenues by 1.1%, though market share was static at 16.1%. Sales fell at Tesco by 1.7%, though it is too early to see the impact of its revamped ‘Brand Guarantee’ initiative. At Asda sales fell by 3.0%, bringing its market share down by 0.7 percentage points to 16.6%. Meanwhile, sales at Morrisons fell by 1.0%, taking share to 10.8%.

In contrast to the overall market, online grocery sales have increased by 9.8% on last year. Despite this rapid expansion, space for retailers to increase both share and revenue in this area remains, with less than a fifth of households currently shopping online.

Fraser McKevitt continues: “Internet sales offer a chance of long term growth – only 18% of households bought groceries online in the last 12 weeks meaning there’s plenty of space for further expansion. The convenience factor and minimum spend restrictions mean online baskets tend to be larger, averaging £67 in value, compared with £14 for the average bricks and mortar trip. Amazon Fresh’s expected full launch early next year could be a major disruptor, bringing down average basket sizes, accommodating on demand shopping, and accelerating the growth of the whole online market.”

After a slowdown earlier this year, the discounters have both seen their rate of growth return to above 17% during this period. Fraser McKevitt explains: “For the second successive month Lidl has reached a new share high, now claiming 4.3% of the market and growth accelerating to 17.9%. Growth was particularly strong in Scotland, the scene of its ‘smarter shopping’ card trial. It’s a similar story for Aldi, where revenues are up 17.6% on a year ago.”

There has been further success this period for Waitrose, up by 2.1%; the Co-operative, where sales grew by 1.0% and Iceland, growing for the sixth month in a row and increasing sales by 3.2%, benefitting from a wider range of premium products.

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