The GB market grew 12.5% in the 12 weeks to 21 February, according to the latest results from Kantar. This period included Christmas and the reintroduction of lockdown restrictions, which drove growth.
Strong growth is now expected to slow
Sales accelerated further in the last four weeks to +15.1%. This was the fastest rate of growth since June 2020. Market growth is however now expected to significantly slow as we head into March, reaching the one year mark of living with COVID.
Online continues to appeal to more shoppers
In the four weeks leading to 21 February online sales hit a new record share once again. The channel now accounts for 15.4% of sales of the overall market. This was up from 8.7% in February 2020. During the past month nearly a quarter of households bought groceries online.
As demand for the online channel grew in 2020 we saw many retailers evolving their online propositions to satisfy the change in shopper habits. This has continued into 2021, with Asda restructuring to prioritise ecommerce. Asda has increased online capacity by 90% since last March to 850,000 weekly slots and is on course to fulfil one million orders per week by the end of the year. To support this shift in demand, it will now expand its store pick model. This investment, which will create 4,500 new store-based online roles, will be counterbalanced by a reduction of around 5,000 roles elsewhere in the business.
Ocado retained its spot as the fastest growing retailer in this period, at +35.3%. This was however a slowdown from the previous reporting period when sales were +36.6%. Ocado announced its trading results for the year 2020 in February. Driven by strong customer demand, Ocado Retail revenue increased by 35% to £2.2 bn. Ocado said this was enabled by a significant increase in the peak day capacity of its three mature CFCs at Hatfield, Dordon and Erith. EBITDA for the Retail business reached £148.5m compared to £40.6m in 2019.
Looking to the future, Ocado needs to improve its product to retain and attract new partners. New deals will enable Ocado to increase investment and improve the proposition, creating a virtuous cycle. We explore this further in our where next for the Ocado Smart Platform? article.
Online continues to have an impact on the convenience sector, with the Snappy Shopper app now live through 650 convenience stores. The app, which provides a ready-made shopper ordering and payment solution, allows independent retailers to quickly launch an online offer, enabling them to target opportunities in the current high and sustained demand for local home shopping. If you are looking for more insight on the convenience channel, see our UK convenience: five trends to watch in 2021.
Discount growth slows
Following over a year of growing ahead of the market, Lidl fell behind market growth in this period, with sales +10.9%. The retailer also lost 0.2pp of market share from the previous reporting period, bringing its share to 5.7%. Aldi on the other hand grew market share on the previous reporting period, by 0.1pp to 7.5%. The retailer's sales growth however remained below the market at 5.6%.
If you are interested in finding out more about the discounters' performance see our opinion piece; five reasons Lidl is winning the discounter battle.
Tesco grows market share
Tesco increased its market share for the first time since December 2016, rising 0.2pp to 27.4%. Sales rose 13.2%, faster growth than both Sainsbury’s and Asda. Tesco begins to grow ahead of the market. All areas of the business contributed to growth including online, convenience and supermarkets.
If you are looking for more insight on the Big Four, check out the following news;
Iceland continues strong performance
Iceland continued to perform well, growing market share 0.3pp to 2.5%. Sales rose by 23.9%, making it once again the fastest growing bricks and mortar retailer.
||12 weeks to 23rd February 2020
||12 weeks to 21tst February 2021
||Sales growth (Y-O-Y%)
|Symbols & Independents
Looking for more insight?
See our latest thinking on what 2021 holds for UK retail in our six trends to focus on in 2021 (Part 1) and part 2.
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