Sainsbury's colney hatch 2

Sluggish growth and falling prices have become ‘the new normal’ in the British grocery market.

Grocery sales have grown by 0.9% on last year for the 12 weeks ending August 2015, according to Kantar Worldpanel. Price deflation means shoppers are now paying 1.7% less for a basket of groceries than a year ago.

“Industry growth of around or below 1% has now persisted since summer 2014 and has become the new normal,” said head of retail and consumer insight at Kantar Worldpanel Fraser McKevitt.

“Despite the accelerating British economy like-for-like grocery prices are still falling, with a representative basket of everyday items now 1.7% cheaper than in 2014.”

Sainsbury’s is the only one of the big four to see an increase in sales, of 0.1%, its first growth since March. Tesco holds 28.8% of the market but its sales have fallen by 0.9%. Meanwhile Morrisons’ decline accelerated to 1.1% on last year.

Asda has reclaimed its position as Britain’s second largest supermarket but has suffered the steepest drop in sales with a 2.5% decline and a 0.6% fall in market share on last year.

“Asda’s greater focus on non-food items means its market share is traditionally higher in the summer, and it’s expected that Sainsbury’s will again become the number two retailer towards Christmas,” said McKevitt.

Waitrose ‘Pick Your Own Offers’ promotion has helped to drive growth by 3.7% and the Co-operative has also increased its sales by 1.1% at the till.

‘The Power Of Frozen’, premium ranges, new store openings and the Food Warehouse format are said to be behind the 3.4% growth at Iceland as it attracts more customers to frozen than last year. However, market share at Iceland remains flat at 2.0%.

“It’s been another successful period for the discounters, with growth at Aldi accelerating to 18.0%. Lidl’s sales have also risen, up 12.8%, taking its market share to a new high of 4.1%,” said McKevitt.