UK’s major supermarkets decline for first time this year

ASDA

The UK grocery market has fallen into decline for the first time this year as the performance of all four major supermarkets worsened, reports The Guardian.

Asda’s sales slid by 5.9 per cent – its worst performance on record and the biggest slump in the market. Tesco was the best of the major chains, with sales down 1.3 per cent according to analysis from Kantar Worldpanel published on Tuesday. That compares with falls of 5.1 per cent and 1 per cent revealed last month.

In contrast, discounters Aldi and Lidl continue to see double-digit growth, with sales up 11.5 per cent and 13.8 per cent respectively, taking their combined market share to a new high of 10.5 per cent. Aldi is now only a hair’s breadth from overtaking the Co-op to become the UK’s fifth largest supermarket.

The latest figures do not include the period after the referendum, but Fraser McKevitt, head of retail and consumer insight at Kantar, said the decision to leave the EU was likely to help bolster the discounters further.

“With an estimated 40 per cent of the food we consume sourced from overseas, any long-term change in exchange rates may threaten the current period of cheaper groceries. Historically, higher prices have led to consumers looking for less expensive alternatives such as own-label products, seeking out brands on promotion or visiting cheaper retailers,” he said.

The immediate economic uncertainty was unlikely to cause a substantial fall in grocery volumes, McKevitt said, if patterns followed those seen during the 2008 financial crisis when basic food, drinks and household sales proved resilient.



A rise in prices may even be helpful for the major supermarkets that declined amid a 1.4 per cent drop in grocery prices over the three-month period. Total sales at Tesco and Morrisons were also hit by store closures as the businesses attempted to adjust to shoppers’ changing habits.

Mike Watkins, Nielsen’s UK head of retailer and business insight, said: “Deflation is no longer deepening and, with the effect on figures of some store closures last year soon to be behind us, we can be more optimistic about a supermarket recovery later this year.”

Analysts at Nielsen said supermarket sales had risen in the four weeks to 18 June, helped by a increase in sales of snacks, alcohol and delicatessen items during the first period of the Euro 2016 football championship. Beers, wines and spirits sales increased 6.2 per cent year-on-year during the period, while crisps and other snacks rose 4.2 per cent, helping the industry achieve its first monthly sales rise for nearly a year.

However, England’s early exit after losing to Iceland on Monday night is likely to bring any Euro 2016 cheer to an end.