Big four supermarkets relying on inflation for growth - Nielsen, Kantar find
By Oliver Haill
Date: Tuesday 17 Oct 2017
(ShareCast News) - Major supermarket groups Tesco, Sainsbury's, Asda and Morrisons continued to both grow sales and lose ground to discounters, with Aldi and Lidl contributing the entire grocery market's volume growth in recent weeks.
Supermarket sales increased in value by 3.1% in the 12 weeks to 8 October, research from Kantar Worldpanel showed on Tuesday, with Lidl and Aldi providing half of this growth.
A rival report from Nielsen on Tuesday showed grocery sales rise 3.9% in the four weeks ending 7 October, with the volume of goods sold increased by just 1.6% and if the discounters were excluded volumes would not have increased at all.
"Supermarket food inflation, at 2.2%, is at its highest for nearly four years and retailers have done a great job of cushioning shoppers from the rising food chain costs they're experiencing, exacerbated by the weakening pound, but this can't last for ever," said Mike Watkins, Nielsen's UK head of retailer and business insight.
"Inflation is helping supermarkets' growth and the good news for them is that shoppers are still spending."
Nielsen noted that grocery inflation was still below that in other parts of the economy - such as travel and fuel - and should peak later in the year.
"Furthermore," said Watkins, "retailers are likely to up their use of price-saving promotions at Christmas, offsetting some of the inflation."
Morrisons was, according to Kantar's 12-week figures, the fastest growing of the large retailers, with sales up 2.8% as growing sales in stores were supplemented by e-commerce growth of 29% in London.
Despite this, the Bradford-based group's overall market share fell by 0.1 percentage points to 10.3%.
Tesco's sales grew 2.1% though its market share shrank 0.3 percentage points to 27.9%.
Sales at Sainsbury's increased 1.9% in the 12 weeks, while market share dropped 0.2 points to 15.8%, with only 35% of group sales coming via price promotions from nearly 40% a year ago.
Asda sustained its recent recovery, with sales up 1.8% in the past 12 weeks.
Online sales growth has slowed to 6.7% from a recent high of 21.9% in October 2014, though Kantar noted that only 18% of the population bought groceries online in the latest 12 weeks, offering lots of potential for long-term growth.
Online specialist Ocado, which provides the back-end for Morrisons' fast-growing unit, increased its own sales 8.7% over the 12 weeks as it continued to win share of the online market.
Kantar calculated grocery inflation at 3.2% for the 12 week period to 8 October as prices continued their rise since January, following a period of grocery price deflation which ran for 30 consecutive periods from September 2014 to December 2016.
Prices are rising fastest in markets such as butter, fish and cola with all major categories now registering inflation.
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