All of the big four supermarkets have suffered sales losses in the 12 weeks to 22 May despite managing to retain shopper numbers, according to latest figures from Kantar Worldpanel.
Tesco showed further signs that its turnaround is underway, putting in the strongest performer out of the big four and stabilising in comparison with historic declines over the past two years. The retailer registered the smallest drop in sales of the big four of 1%.
Sainsbury’s meanwhile has felt the impact of the changes to its promotional strategy from multi-pack deals to straightforward price cuts, recording a 1.2% sales decline – which has led to a drop in its market share to 16.2%.
Asda’s low-price positioning continued to feel the targeted effect of Aldi and Lidl’s growth, Kantar said. Sales at the supermarket fell 5.1% on last year giving it a 15.8% share of the market.
Morrisons continued to be affected by store disposals, with sales falling 2.1%.
Edward Garner, director at Kantar Worldpanel, said: “While the big four are struggling to keep their market share what’s clear is that consumers aren’t flocking away from their stores – their combined shopper numbers have dropped only 0.2% in the latest 12 weeks.
“In fact, 94% of Aldi and Lidl shoppers still visit at least one of the four major retailers every four weeks. However, consumers’ spend is increasingly being shared with other growing outlets which also include Waitrose, the Co-operative and Iceland and average household spend for the big four has dropped by 2.9%.”
Waitrose has achieved a record share of the grocery market of 5.3%, growing sales by 2.1%. The Co-operative continued its recent strong run, posting sales growth of 3.3% for the second period in a row to achieve a market share of 6.2%.
Lidl and Aldi remained the fastest growing retailers – up 14.2% and 11.4% respectively.
Kantar added the market as a whole was essentially flat, posting value growth of just 0.1%, with food price deflation remaining at 1.5%.
The latest data from Nielsen highlighted the “most encouraging” figures for the supermarkets in more than eight months. During the four weeks to the 21 May, the value of sales was down just -0.1% versus the same period a year ago, while volume was flat. The last time both value and volume year-on-year figures were better than these was the four-week period ending 12 September 2015.
“These are the most encouraging figures for the supermarkets for quite some time, driven by the fortnight up to the 14 May when good weather helped value growths return to positive territory of 2.1%,” said Mike Watkins, head of retailer and business insight at Nielsen. “However, it does show how reliant they are on the weather for weekly growth, particularly with deflation continuing to drive food prices down.”
All four of the major supermarkets saw a year-on-year decline in sales during the 12-week period, however, with Asda’s being the most pronounced (-5.6%). In contrast, Aldi (+14.2%) and Lidl (+13.2%) continued to see large year-on-year gains.
The BRC–Nielsen shop price index for May highlighted the ongoing challenge faced by the supermarkets as it showed no sign of an end for shop price deflation. Overall shop prices reported deflation of 1.8% in May from the 1.7% decline in April, with non-food deflation slowing to 2.7% from 2.9% in April. However, food prices moved back into deflationary territory in May as it continued to fluctuate around the zero mark. Fresh food reported accelerating deflation, falling to 0.8% from 0.5% in April. This compared with the deepest deflation rate of 2015 which was reported in May 2015. Ambient food inflation fell back to 0.4% in May after accelerating sharply in April to 1%.
Mike Watkins of Nielsen said: “Shop price inflation remains below consumer price inflation and falling food prices are still being driven lower by global commodity prices as well as intense competition, which shows no sign of relenting any time soon. Non-food prices also continue to fall, and with shoppers indicating that they are becoming more cautious about spending, retailers will have to keep prices the same or probably even lower over the next six months.”
Dutch supermarket Ahold (AH) has announced it has had a strong start to the year with good momentum across all its markets. There was a 4.3% increase in group sales to €11.8bn in the first quarter, up 3.5% at constant exchange rates. Ahold also reported continued strong online sales growth, with net consumer sales up 27.4% at constant exchange rates. The underlying operating margin came in at 3.8%, 0.3% percentage points higher than a year ago. Underlying operating income also rose 15.1% to €449m.
CEO Dick Boer said: “We continue to deliver on our strategic objectives, with a good operational and financial performance in the first quarter. Our focus remains on serving our customers and delivering on our Simplicity program, in order to invest in our great local brands to ensure that we provide even more value and innovation.
“In the Netherlands, we were pleased to continue to deliver strong identical sales growth, as our customers respond positively to the ongoing improvements we are making to our stores, assortment and service. Our online businesses delivered excellent growth of over 30% in net consumer sales during the quarter. In the United States, we had a solid performance and continued to invest in our customer proposition, including the rollout of our new bakery departments.”
He added that there was also good progress on the proposed merger with Delhaize, which is expected to complete in mid-2016.
Tesco share price has climbed 0.4% this morning to 165.7p following the release of the latest market share figures. Sainsbury’s (SBRY)and Morrisons haven’t fared quite so well, with a drop of 1.6% to 264.2p and 1% to 196.3p respectively.
Yesterday in the City
Morrisons (MRW) ended the day 0.1% up at 198.2p after announcing a £200m bond buy-back plan reduce its outstanding debt.
Elsewhere it was a fairly quiet start to the week on the markets with little movement of note.
There was more misery for Marks & Spencer (MKS) investors, with the stock down another 1.8% to 379.7p. Others in the red for the day included Greencore (GNC), down 2.3% to 344.7p, Tesco (TSCO), down 1.3% to 165.1p and Greggs (GRG), down 1.1% to 1,127p.