Convenience and online drive GB market growth

Lucy Ingram
Retail Analyst
@RetailAnalysis

Date : 23 June 2020

In the 12-weeks prior to 14th June take home grocery sales grew 13.7% year-on-year, according to the latest figures from Kantar. This is a slight slow down from the previous 12-week period where sales growth was 14.3%. We explore the growth in more detail and look at key retailers' performance.

Shopping patterns remain severely disrupted

This 12-week period captures the full lockdown period for the first time. There are signs that the market is heading back to some form of normality, as lockdown eases, however shopping patterns are still significantly disrupted. Because of this growth continues to be driven by the online and convenience channel.

Sales growth for the four week period to 14th June was 18.9%, compared to 17.2% the previous 4 weeks. Households made 77 m fewer trips to grocers in the previous four weeks compared to last year, however this is still 19 m more than in May. Shoppers continue to buy more than usual, on average £26.37, a 42% increase on June last year.

Kantar's figures do not reflect the loss in sales from food and drink purchased on the go. This is expected to represent a £347m drop in sales.

Inflation during this period was high, at 4%.

Ocado achieves highest ever market share

Online sales rose 91% over the previous four weeks, with nearly one in five households purchasing groceries online.

Ocado has reached its highest ever market share, at 1.7%. The online retailer has continually hit high sales growth this year, with this 12 week period showing the highest so far, 42.2%. In response to the growing demand for online products Ocado has raised £1bn from investors. The retailer said the COVID-19 pandemic has acted as a “catalyst” for a permanent and significant move towards online grocery deliveries. Ocado will use the cash raised to increase capacity with its existing Ocado Solution partners, both in the UK and internationally, including Kroger, Sobeys and Casino.

For subscribers looking for more insight, read our report on how the online channel will be impacted by the coronavirus (COVID-19) in 2020.

Co-op sees highest market share since 2001

Sales in convenience stores accounted for 14.7% of all sales over this period, considerably higher than normal. This was however lower than the peak in April, where convenience sales accounted for 16.3%.

Co-op continues to benefit from shoppers seeking out local, smaller stores, with sales growth of 34.5%. The retailer's market share is now at 7.4%, its highest figure since March 2001. Co-op is now rolling out robot delivery to further communities across Milton Keynes and surrounding towns and villages in response to increased demand . The retailer has seen the number of customers using robot deliveries more than double since the start of lockdown, with the value of transactions increasing four-fold as shopping habits change. The initiative was originally intended to offer additional choice, ease and convenience for time-pressed shoppers. However, the during lockdown the service has provided a valuable service for vulnerable or housebound members of the community.  

Independent retailers continue to show strong performance, with sales growth of 69.3% during the period. This compares to 3.7% at the start of the year in January.

For subscribers looking for more insight, read our report on how the coronavirus (COVID-19) is having an impact on global convenience trends.

Tesco best performer of the Big Four

Tesco was the best performer of the Big Four, with sales growth of 12.1%. This was helped by it being the biggest online operator of the Big Four and its large network of Tesco Express stores. During this period Tesco announced Alan Stewart is to retire as its Chief Financial Officer. He will leave the company on 30 April 2021. Tesco's board will now conduct a thorough search internally and externally to identify a successor to work alongside Ken Murphy, who will take up the role on 1 October 2020.

Look out for our coverage of Tesco's Q1 results on Friday 26th June.

Weaker growth from discounters continues

Aldi's growth for this period was 8.0%, compared to 10.4% in the previous 12 weeks.

Lidl continues to outperform Aldi, with growth remaining in double digits at 14.3%. This was compared to 16.5% in the previous reporting period. 

Iceland continues strong performance

Frozen food specialist Iceland continues to perform well, with sales growth of 31.4%. The retailer's market share has reached 2.5%. This matches its highest ever share, last achieved in June 2000. Earlier in June Iceland announced founder and executive chairman, Sir Malcolm Walker and chief executive officer Tarsem Dhaliwal have taken full ownership of Iceland after buying out its remaining external investor Brait.

Detailed results

Retailer 12 weeks to 16th June 2019 12 weeks to 14th June 2020 Sales growth (Y-O-Y%)
Tesco 27.3% 26.9% 12.1%
Sainsbury's 15.3% 14.9% 10.2%
Asda 14.9% 13.9% 6.3%
Morrisons 10.4% 10.1% 10.5%
Aldi 7.9% 7.5% 8.0%
Co-op 6.2% 7.4% 34.5%
Lidl 5.7% 5.8% 14.3%
Waitrose 5.0% 4.8% 8.6%
Iceland 2.1% 2.5% 31.4%
Ocado 1.3% 1.7% 42.2%
Other Multiples 1.9% 2.0% 19.8%
Symbols & Independents 1.7% 2.6% 69.3%

Source: Kantar

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