Growth in the UK grocery market slowed dramatically over the past three months, as shoppers further reined in their spending in response to inflation.

Data from Kantar Worldpanel showed sales in the three months to 20 March were up 2.6% over the equivalent period last year. That represented a major slowdown from the growth of 3.9% achieved in the previous period.

Food inflation now stands up 4% – meaning the market grew below the rate of price increases for the first time in almost two years.

Aldi upped its share of the UK market from 2.8% a year ago to 3.1%, continuing the discounters’ resurgence. Lidl grew its market share over the same period from 2.3% to a record 2.5%.

“While there are no signs yet of the explosive growth in economy own-label ranges that we saw in 2008, there are clear indications value for money is driving retailer performance,” said Kantar’s Edward Garner.

However, the growth for Aldi and Lidl was driven by existing shoppers spending more, rather than by new shoppers visiting the stores.

Garner added: “While some shoppers have sought value for money this month, not all shoppers shared the same view. Waitrose continued to perform well, posting a higher market share of 4.3% compared to 4.1% a year ago.”

Morrisons increased its share slightly over the 12-week period, from 12.1% to 12.2%. Tesco (30.2%) and Asda (17%) both experienced marginal falls in market share, while Sainsbury’s remained static at 16.3%.

Read more
Tesco price match ‘will hit Waitrose margins’ (28 March 2011)
Discounter revival rolls on into February (2 March 2011)
Quality drives upsurge in sales at Lidl and Aldi (12 February 2011)