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Market growth was 1.4% in the 12 weeks to 16 June 2019, according to the latest results from Kantar. Performance has slowed compared to this time last year, when growth was 2.1%. We look at the factors influencing this and key retailers' performance.

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Asda announces plans to shake up its senior commercial food team structure.

Simplifying internal operations

Asda has announced plans to restructure its senior commercial food team.

The changes are designed to simplify internal operations, speed up decision making and boost the business’ fluidity.

The move is intended to help the business in achieving its overarching price investment strategy.

The restructure will see the following changes:

  • Lizzy Massey will head up non-edible grocery, and Tracey Ford edible grocery
  • Paul Gillow, current VP for own brand, will take on a broader remit with Commercial strategy
  • Richard Dent will become VP for fresh and frozen

The shake-up comes as Derek Lawlor is promoted to take on responsibilities for all of food and general merchandise, following the departure of Nick Jones.

Commenting on the changes, Derek Lawlor said: “These changes will give suppliers better direct access to senior leaders within the business, which will allow us to deepen relationships with our supply base for the benefit of customers by driving greater quality, value and innovation opportunities.”

 

Want to know more?

Retail Analysis subscribers can read and download our new Asda, Patchway store visit report here.

In the 12 weeks to 19th May 2019 the grocery market grew by 1.3% according to the latest results from Kantar. This was slower than the previous reporting period of April, and the equivalent period in 2018. Inflation continued to decrease (+1.2% compared to +1.4% in the previous period). We look at these results in more detail. 

Slowing growth

Shoppers have cut back on spend this month. In May growth slowed 0.7pp from April where year-on-year sales grew by 2%. This was to be expected as retailers were competing against a record breaking spend over Easter week and a period where warm weather drew shoppers into store.

Retailers also struggled to compete against last year's results of 2.7% growth. This was a period when the UK experienced the hottest May on record and events such as the FA Cup Final and royal wedding encouraged spending. The market did however show some resilience as volume sales remained the same as last year.

Discounters continue to win

The discounters' success shows no signs of slowing down as their impressive performance continues;

  • Aldi and Lidl have continued to outperform the market, reaching a record market share of 13.8%
  • The two discounters are now worth £344m more than this time last year
  • Aldi continued to perform the best out of the two discounters
    • Its year-on-year sales grew by 11.1% and market share increased to 8% from 7.3% this time last year
  • Lidl's growth was also strong, at 8.5% with market share increasing to 5.8% from 5.4% in this period last year

Mixed performance from other retailers 

Aside from Aldi and Lidl, Co-op performed the best with sales growth of 3.7%. Results were driven by its acquisition of Nisa and robust performance from the food business. FY2018 results revealed Co-op's like-for-like food sales were +4.4%, its fastest growth in seven years. The results marked five consecutive years of like-for-like revenue growth for the retailer. 

Tesco was the most successful performer of the big four. Despite sales remaining flat, in the context of a challenging market where Sainsbury's performed at -1.7% this is a good result for Tesco. For the latest insight on the big four, subscribers can download our latest strategic outlook reports for Tesco and Sainsbury's.

Asda and Sainsbury's now have exactly the same market share. Asda however performed better than Sainsbury's in sales growth. This was driven by the positive performance of its online business which grew by 10.7% in the period.

For more information see our newly updated UK like-for-like data.

Retailer 12 weeks to 20th May 2018 12 weeks to 19th May 2019 Sales growth (Y-O-Y%)
Tesco 27.7 27.3 0.0%
Sainsbury's 15.7 15.2 -1.7%
Asda 15.4 15.2 -0.2%
Morrisons 10.5 10.4 -0.4%
Aldi 7.3 8.0 11.1%
Co-op 6.0 6.1 3.7%
Lidl 5.4 5.8 8.5%
Waitrose 5.1 5.1 0.1%
Iceland 2.1 2.1 0.2%
Ocado 1.2 1.3 6.4%
Other Multiples 1.8 1.9 5.8%
Symbols & Independents 1.8 1.7 -2.0%

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At the release of its Q1 results, Asda has provided new detail about its future plans in the wake of now abandoned plans to merge with Sainsbury's.

Easter impact to trading

In the quarter ending March 31st reported a 1.1% decline in sales, impacted by the late timing of Easter. Adjusted for this calendar impact, like-for-like sales would have risen 0.5%, reflecting both a positive volume response to investments in price and a pick up in customer transactions. Previously Asda had grown LFL sales for seven previous consecutive quarters.

IPO possible following Sainsbury's merger outcome

Commenting on Asda's future strategy, Walmart's CFO Brett Biggs said:  "We were disappointed in the CMA’s decision in the UK.  We’re focused on continuing to execute the strategy to strengthen Asda’s long-term success, including the potential of an IPO at some point in the future.  We’ll be thoughtful and measured in our approach.  We remain focused and confident in our International strategy of building strong local businesses powered by Walmart. " His words echo comments earlier this week from Walmart International CEO, Judith McKenna. In an address to colleagues she said: "While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO – a public listing – to strengthen your long term success."

Investing in price

Asda highlighted how improvements to its price positioning positively impacting trading in Q1, with 'thousands of Rollbacks' on popular brands and continuing investment inn own brand ranges.  Earlier this week CEO Roger Burnley said Asda would accelerate its position on price, revealing plans to invest £80m in price through the rest of 2019. 

Technology to enhance the customer experience

Asda will also accelerate its focus on 'hassle-free shopping" including a test on same day delivery of groceries. Linked to this, it plans to roll out mobile Scan and Go to more stores following its launch at 25 stores last week. It will also introduce parcel collection towers to more stores following their success at the Trafford Centre and Patchway (Bristol). The retailer also confirmed that it will develop Stevenage as its 'tech store' where a range of new solutions will be implemented to see "the benefits of a number of different technology working together". In Q1, online grocery sales grew by 10% and George.com also delivered double digit growth.

Action on plastics

Asda is stepping up actions to cut back on plastic packaging. In the 12 months to February 2019, it removed 6,500 tonnes of plastic from its own brand products, part of a continuing commitment to reduce plastic packaging.

 

See also: Lawlor promoted in Asda management shakeup

 

More insight for Retail Analysis subscribers

  • Asda Patchway store visit: See inside Asda's newly reinvented flagship store to see how Asda has renewed its destination status
  • Latest UK like for like data: See how Asda's performance compares to its major competitors
  • UK retail challenges: impacts and implications: From legacy estates to transformative technology, we explore seven ways market, channel and shopper dynamics are challenging UK grocery.

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Understand how Asda is evolving its business model to compete harder on price, quality and the customer experience under new CEO Roger Burnley.

Our essential guide to retailers' strategic priorities in the UK and the opportunities they create for suppliers.

An essential summary of trading priorities, latest developments, and other key commercial insights for Asda.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

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