Market growth once again slowed in this reporting period as shoppers continued to return to their pre-Covid behaviours, and many stopped shielding.
In the 12 weeks ending 6th September take home grocery sales grew by 10.8%, according to Kantar. This was the fifth month to see double digit growth, however was a slowdown compared to the 14.4% growth seen in the previous reporting period.
We look at the results in more detail and focus on how we have seen retailers respond to the evolving impact Covid is having on shopping patterns.
Retailers continued to expand online operations to satisfy increased demand
Online growth has continued to be high, with sales rising 77% in the previous four weeks. The channel made up 12.5% of total sales, which although remaining high, is a slowdown from the 13.5% of the previous four weeks.
Ocado remained the fastest growing retailer at 41.2%. Its market share did however decrease from 1.8% to 1.7%. This period was particularly significant for Ocado as it launched its partnership with M&S, meaning for the first time shoppers can buy the entire M&S range online. The joint venture currently serves 74% of the UK population. Significant investment is being made to expand its capacity, which it aims to increase by 40% in 2021.
The retailer continues to innovate further, investing in vertical farms. It also announced CFO Duncan Tatton-Brown will be stepping down in November.
We are continuing to see rapid evolution in the channel as retailers look to satisfy the increased demand from shoppers;
Discounters evolve their proposition
As shoppers used discounters more during this period, both Aldi and Lidl grew market share by 0.1pp, bringing their combined share to 14%.
Both retailers continue to evolve their propositions. In April we looked at how the pandemic could affect the future of the channel, expecting to see the discounters create a stronger ecommerce proposition. This week saw another step in this direction as Aldi launched a Click & Collect trial for staff in one store.
We also said we expected to see the discounters launch new digital and payment solutions, which we have seen with Lidl launching the Lidl Plus app in the UK in early September.
For subscribers looking for more insight see our Lidl Plus loyalty programme.
Growing online and cutting prices at the Big Four
Morrisons remained the fastest growing of the Big Four, with sales of +12.9%. Growth was driven by strong performance online. Morrisons has released its half year results and shown it exited the period with online providing 10% of its turnover. The channel also contributed to half of group LFL sales growth. This follows an impressive acceleration and diversification of Morrisons online operations, including the launch of its full grocery range on Amazon.
Amid fierce competition to win shoppers with everyday low prices we have seen Morrisons launch new price cuts on 400 lines. Asda has also announced a £100m price investment, lowering prices on 1000s of products. This follows the launch of Tesco's Aldi price match in March. We expect to see a continued focus on low prices as retailers look to appeal to shoppers reverting to savvy shopping behaviour.
||12 weeks to 8th September 2019
||12 weeks to 6th September 2020
||Sales growth (Y-O-Y%)
|Symbols & Independents
Looking for more insight?
UK channel forecasts webinar 2020-2022 (Retail Analysis subscribers only)
16 September | 10.00AM BST
Interact with our experts and learn what the insights from the market forecasts report mean for your business. Live Q&A.