Record growth in GB grocery market

Lucy Ingram
Retail Analyst
@RetailAnalysis

Date : 21 July 2020

Take home grocery sales continue to rise, with 16.9% growth in the 12-week period up to 12th July, according to Kantar. This was the fastest growth on record since 1994, showing what a significant impact the pandemic is having on shoppers' behaviour. The 12 weeks include sales after the initial phase of strict lockdown in April, capturing the three months following this of eased restrictions for movement but not eating out. We look at these results in more detail, considering the strong performances of the Big Four and other retailers such as Ocado and Iceland.

Growth slowing from June peak

In this 12-week period shopping patterns continued to be disrupted, once again generating strong performance in convenience and online. In the previous four weeks however, shoppers have started to respond to the eased restrictions. This has resulted in supermarket sales growth decelerating to 14.6%, from 18.9% in June. Sales in convenience stores remain up by over a quarter year-on-year, however they have seen 2.6m fewer shoppers since the peak of lockdown in April.

Ocado remains the fastest growing retailer

Ocado remained the fastest growing retailer at 45.5%. The retailer has now released its H1 results, showing revenue grew by 27.2% in the first half (26 weeks ended 31st May), whilst Group revenue (Retail, Solutions and logistics) was £1,086.8m up 23.2%. Ocado has said it believes that the channel shift towards online shopping is sustainable. Its survey data shows that many consumers who were shopping online during the peak of the pandemic in their respective countries have either continued to do so (56% of those in China), or intend to continue online shopping as ‘lockdown’ measures ease. According to Ocado's research in the UK, 30% of consumers say they will order more of their groceries online after the pandemic.

If you are looking for more insight on how COVID-19 will change the retail channels, see a selection of analyst's opinions.

Morrisons is the fastest growing of the Big Four

Once again all of the Big Four saw strong sales growth.

Morrisons gained market share for the first time since 2015, rising from 10.1% in June to 10.3% in July. The retailer was the fastest growing of the Big Four, with sales at +17.4%.

Tesco was the second best performer, with sales rising 15.1%. The retailer recently reported a huge increase in sales for Q1 (13 weeks ending 30th May 2020). Online was the most striking contributor to Tesco's dramatic UK sales growth, with sales up 48.5% for the period and almost 100% by the end of May. The retailer scaled up capacity from 600,000 to over 1.2m slots per week to meet soaring demand. Across the quarter, 12.6m deliveries were fulfilled, with click & collect's share of these orders increasing to around 25%. Convenience sales grew 9.5%, helped by very strong growth through One Stop. Large stores also grew strongly, particularly at the start of the lockdown, with sales up 5.4% over the quarter. Sales through discount fascia Jack's were another highlight with 62% LFL growth and all stores now achieving sales of over £100,000/week. Tesco noted how it saw net switching gains from Aldi for the first time in over a decade as shoppers responded positively to the new Aldi Price Match mechanic, launched just before of the pandemic outbreak.

Sainsbury's also performed well with sales rising 13.5%. It also reported a strong Q1, with 8.5% (8.2% LFL) sales growth for the 16 weeks to June 27th, driven by sharp increases in grocery and online. Sainsbury's saw 10.5% rise in grocery sales. This represents outperformance against the rest of the Big Four and the total market on Kantar's till roll GB volume tracking, lifted by customers switching to Sainsbury's as it improved its price position relative to key competitors. The business also reported significant improvements in customer satisfaction, helped by sector leading scores on social distancing. Online grocery sales were up 87% year-on-year (+125% in May and +135% in June) with orders now running at over 650,000 per week, up 75% since the start of the pandemic.

Lidl is the strongest performer of the discounters

Our shopper research has shown that discount stores have had a larger drop in usage than other channels throughout the lockdown period. This is primarily due to two reasons;

  1. The inability to get everything needed in one shop
  2. Perceived additional challenges in social distancing due to the smaller nature of the format

However, both discounters showed stronger performance in July than in June. Lidl continues to be the best performer of the discounters with sales +17.3%, compared to 14.3% in the previous reporting period.  Aldi's sales grew at 13%, compared to 8% in the previous reporting period.

In early July, Lidl announced plans to continue its rapid expansion, aiming to open 100 new stores in the UK by 2023, bringing its total to 1,000 stores.

Aldi has expanded its Deliveroo trial to include a further 11 stores to continue to support vulnerable shoppers.

Frozen food trend continues

Another notable performance came from frozen food specialist Iceland. The retailer has seen positive results as shoppers look for convenient products with long-lasting life, as they make fewer trips to buy groceries. It achieved its fastest ever growth, at 34.1%. Its market share has now grown to 2.5%, from 2.2% in 2019.

During this period Iceland's joint MD left the business.

Consumers' changing food and drink habits

Growth continues to be boosted by the Kantar's figures not covering drink and food eaten on the go. COVID-19 has caused a monumental shift in consumers’ food and drink habits. During the pandemic, the boundaries between eating at home and out-of-home, already blurred, have broken down further resulting in dramatic changes to supply and demand of food and drink in the UK.

For more insight on the food-to-go channel;

Detailed results

Retailer 12 weeks to 14th July 2019 12 weeks to 12th July 2020 Sales growth (Y-O-Y%)
Tesco 27.1% 26.7% 15.1%
Sainsbury's 15.3% 14.9% 13.5%
Asda 14.9% 14.1% 11.0%
Morrisons 10.2% 10.3% 17.4%
Aldi 8.1% 7.8% 13.0%
Co-op 6.4% 7.2% 30.6%
Lidl 5.8% 5.9% 17.3%
Waitrose 5.0% 4.7% 10.9%
Iceland 2.2% 2.5% 34.1%
Ocado 1.4% 1.7% 45.5%
Other Multiples 1.9% 2.0% 19.5%
Symbols & Independents 1.7% 2.3% 59.5%

Source: Kantar

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