GB grocery market: slowest growth since March 2018

Date : 02 April 2019

Growth slowed to 1.4% in the 12 weeks to 24th March, according to Kantar. This makes it the slowest growth rate since March 2018. Inflation edged up from 1.4% to 1.5% causing implied volumes to dip into negative territory. We look at the results in more detail.

Seasonal changes impact growth

Despite the uncertainty surrounding Brexit challenges have mainly come for retailers from changes to the timing of seasonal events. Retailers have been impacted by Easter being much later in 2019, falling on the 19th April, compared to the 1st April in 2018. Mothers Day also fell outside this period on 31st March, compared to 11th March in 2018. This impacts the Big Four in particular, who rely more heavily on these events to boost to trading.

Asda becomes the second largest retailer

Asda has overtaken Sainsbury's and become the retailer with the second largest market share, at 15.4%, compared to Sainsbury's at 15.3%. Asda sales continue to grow, albeit at a marginal rate of 0.1%. However this is positive, especially when compared to Sainsbury's whose sales were down -1.8% year-on-year.

However, these results do not show the full picture. Sainsbury's is still ahead of Asda in terms of total sales. The sales measured by Kantar only cover food and grocery, but not Argos and Habitat.

Helping to drive Asda's recovery is the retailer's success in reaching more quality seeking shoppers, with investments in fresh produce and its own brand offer broadening its appeal to more affluent demographics. To see how Asda is transforming the in-store experience, check back soon on our Asda hub to see our store visit report to newly remodelled Asda Patchway.

Divergent promotional trends at Waitrose and Tesco

Waitrose saw its strongest growth since August 2018, at 1.3%. This was driven by the retailer reducing its promotional activity and focusing more on full price sales.

Waitrose's scaling back of promotions contrasts with Tesco whose deal penetration reached 40.1% in Kantar's data.  Overall however promotions in the grocery market are at the lowest they have been in a decade.

Tesco full year results will be reported on our Tesco hub on April 10th.

Fastest growth from discounters

The discounters seem to be unaffected by the seasonal date changes and growth remains strong. Particularly for Aldi which was the fastest growing retailer at 10.6%, reaching a record market share of 8%.

This period saw Aldi launch a new banner, Aldi 'Local'. The retailer has said this is not a move into the convenience sector. As expansion in city centres and particularly London, is often difficult for discounters, innovation in small formats gives them more opportunity to grow presence in these areas and target shoppers on different missions.

Lidl also continues to grow, as the second fastest retailer, at 5.8%. This was a 0.4pp increase on the 12 weeks up to February 24th.

This means the two discounters’ overall market share is now 13.6%.

Co-op and Ocado launch new online services

Growth at Co-op, at 3.9% and Ocado at 5.5% remains strong, despite disruption caused by the recent fire at its Andover CFC. We have recently seen both retailers look to move into online 'top-up' shopping.

Co-op has launched its first online delivery service. It is initially available to shoppers within a 2.5 mile radius of a Co-op store on the Kings Road in Chelsea, with plans to be rolled out to a further eight stores in London, and if successful, the rest of the UK.

Ocado has launched a new one hour delivery service called Ocado Zoom which is available in selected postcodes in West London.

Other retailers

  • Morrisons growth has stagnated, with sales down -0.1%. This is the first time it has had negative results since December 2016. The retailer has been attracting more shoppers however, has seen a decline in basket size and Kantar's numbers do not include Morrisons fast growing sales through wholesale partners, including McColl's and Amazon. Read our new strategic outlook for Morrisons to find out more about its recent annual results plans for 2019.
  • Iceland saw sales growth of 0.6%, maintaining its market share of 2.1%.

Retailer

12 weeks to
25th March 2018

12 weeks to
24th March 2019

Sales growth
(Y-O-Y%)

Tesco 27.6 27.4 0.5%
Sainsbury's 15.8 15.3 -1.8%
Asda 15.6 15.4 0.1%
Morrisons 10.4 10.3 -0.1%
Aldi 7.3 8.0 10.6%
Co-op 6.0 6.1 3.9%
Lidl 5.3 5.6 5.8%
Waitrose 5.0 5.0 1.3%
Iceland 2.1 2.1 0.6%
Ocado 1.2 1.3 5.5%
Other Multiples 1.8 1.8 2.7%
Symbols & Independents 1.7 1.7 0.6%

 

 

 

IGD Tesco Business Update 2019

8 May, London

Dave Lewis and his leadership team invite you to a crucial supplier event to help you stay close to Tesco’s strategic vision in its centenary year.

Find out more »