Today’s Kantar Worldpanel data on the grocers again shows an industry under pressure – but it is no longer just three listed supermarkets suffering in the fallout from rapidly shifting consumer trends.
The figures for the 12 weeks to 9 November found the first industry-wide sales decline since Kantar began collating its data, with a three month 0.2% decline through the tills.
The sector-wide sales fall was predictably driven by year-on-year declines for the three listed supermarkets and food price deflation of 0.4%.
But notably the current tough conditions are affecting a wider range of food retailers than just those reliant on out-of-town superstores, with sales at The Co-op, Iceland and Farmfoods on the way down and growth slowing at Waitrose and even Aldi
On the surface there remains little to encourage the listed three supermarkets. Tesco’s sales fall led the way, dropping 3.7%, following by Morrisons (3.3%) and Sainsbury’s (2.5%).
However, it may be that Tesco has the most cause for cautious optimism from the figures, which showed its market share declining by 1.1 percentage point to 28.7% - its slowest rate of decline for the last four periods which peaked at 1.5 percentage points in the three months to August.
Sainsbury’s also showed a slowdown market share decline, with its 0.4% market share contraction to 16.4% more modest than the 0.6 percentage point fall last month. However, Morrisons’ 0.3 percentage point fall was its highest in three months.
Asda’s sales edged down by 0.2% to maintain a 17.2% market share.
That the major supermarkets are struggling to maintain sales as shopping habits shift is hardly a surprise. Perhaps more notable is the breadth of slowdown across the industry.
Firstly, sales at The Co-Op, Iceland and Farm Foods are also declining. Farmfoods in particular saw 4.5% collapse in sales, while Co-op was 1.3% down and Iceland lost 0.8% of its sales.
Bernstein analysts commented: “This suggests, given the breadth of choice and differentiation in the UK, being a cheap retailer is not alone enough. While these banners were growing a year ago, the competitive landscape has changed since then and with ever increasing choice, execution is everything.”
Certainly, Aldi and Lidl are continuing their rapid growth – sales rising 25.5% and 16.8% respectively.
However even the all-conquering discounters are beginning to see a plateauing of growth – as sales growth slowed from Aldi’s 27.3% and Lidl’s 18.1% during the previous period. Additionally, during the same period in 2013 Aldi was growing sales by 31.1% (though Lidl’s 2014 growth rate is up from 13.8% in the corresponding period last year).
A similar story appears to be occurring at the top end of the market, where Waitrose’s 5.6% sales growth over the past three months is still down from the 8.8% growth it experienced in the same period last year and 6.8% it recorded last month.
The data seems to suggest that conditions across the sector are continuing to deteriorate even as the major supermarkets begin to soften their year-on-year declines as the comparatives become less demanding.
The discounters continue to aggressively grow their market share (now up to a combined 8.4%), but they are growing slightly more slowly in what is now a declining market. As food deflation shows little sign of easing and UK wage growth remains low, all food retailers are now feeling a measure of the pain.