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| UK grocery sales in decline for first time in 20 years | UK grocery sales in decline for first time in 20 years |
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| UK grocery sales have gone into decline for the first time in at least 20 years as a raging price war and the falling cost of food commodities hit Britain’s supermarkets. | UK grocery sales have gone into decline for the first time in at least 20 years as a raging price war and the falling cost of food commodities hit Britain’s supermarkets. |
| In good news for shoppers, the average price of a basket of everyday essentials such as milk, bread and vegetables now costs 0.4% less than it did a year ago, according to the latest figures from market research firm Kantar Worldpanel. | In good news for shoppers, the average price of a basket of everyday essentials such as milk, bread and vegetables now costs 0.4% less than it did a year ago, according to the latest figures from market research firm Kantar Worldpanel. |
| But the figures highlight a painful few months for the UK’s biggest retailers with all of the “big four” supermarkets seeing sales fall back in the 12 weeks to 9 November. Tesco continues to be the worst performer with sales dropping by 3.7%, but Morrisons’ performance deteriorated at the fastest rate, with the slump in sales accelerating to 3.3%, from 1.3% a month ago. | But the figures highlight a painful few months for the UK’s biggest retailers with all of the “big four” supermarkets seeing sales fall back in the 12 weeks to 9 November. Tesco continues to be the worst performer with sales dropping by 3.7%, but Morrisons’ performance deteriorated at the fastest rate, with the slump in sales accelerating to 3.3%, from 1.3% a month ago. |
| Sainsbury’s trading figures also worsened, with sales down 2.5%. Asda’s sales also went into decline, for the first time in 20 years if you exclude March this year when the timing of Easter affected the figures. Still, the Walmart-owned group was the only one of the big four to hold market share. | |
| Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel said: “The declining grocery market will be of concern to retailers as they gear up for the key Christmas trading season.” | Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel said: “The declining grocery market will be of concern to retailers as they gear up for the key Christmas trading season.” |
| As the amount of goods shoppers are buying is barely rising while prices continue to fall, McKevitt added: “I think it’s likely this pattern will continue until Christmas and into the first half of 2015.” | |
| In a pattern that has continued throughout this year, the German discounters Aldi and Lidl continued to grow strongly, as did the up-market grocer Waitrose. | In a pattern that has continued throughout this year, the German discounters Aldi and Lidl continued to grow strongly, as did the up-market grocer Waitrose. |
| But only Waitrose picked up the pace of growth, to 5.6%, shoring up its spot at the UK’s sixth largest supermarket. Aldi’s growth slowed to 25.5% from 29.1% last month - its slowest pace of growth since 2012 – while Lidl’s growth slowed to 16.8% from 17.7% last month. | |
| Last week Asda reported its biggest sales decline in eight years with like-for-like sales down 1.6% in the three months to 30 September. Chief executive Andy Clarke blamed the intensifying price war and a blizzard of discount vouchers for the deterioration. | Last week Asda reported its biggest sales decline in eight years with like-for-like sales down 1.6% in the three months to 30 September. Chief executive Andy Clarke blamed the intensifying price war and a blizzard of discount vouchers for the deterioration. |
| Profits at Tesco, Sainsbury’s and Morrisons have also gone into reverse as shoppers rein in their spending, food commodity prices drop in the wake of strong harvests and competition intensifies as a result of the growth of Aldi and Lidl. Further pressure is coming from structural changes in the market such as the growth of online and convenience store retailing. | Profits at Tesco, Sainsbury’s and Morrisons have also gone into reverse as shoppers rein in their spending, food commodity prices drop in the wake of strong harvests and competition intensifies as a result of the growth of Aldi and Lidl. Further pressure is coming from structural changes in the market such as the growth of online and convenience store retailing. |
| Goldman Sachs analyst Rob Joyce has warned that supermarkets needed to take drastic action by shutting one in five of their stores if the financial health of the mainstream grocery chains is to recover from the damage being wreaked by altered shopping habits and the rise of the discounters. | Goldman Sachs analyst Rob Joyce has warned that supermarkets needed to take drastic action by shutting one in five of their stores if the financial health of the mainstream grocery chains is to recover from the damage being wreaked by altered shopping habits and the rise of the discounters. |
| He was gloomy about the ability of the major players to bounce back if the fight was based on price cuts alone. “We believe that any major price investments by Morrisons, Sainsbury’s or Tesco can be exceeded by the discounters,” he wrote. | He was gloomy about the ability of the major players to bounce back if the fight was based on price cuts alone. “We believe that any major price investments by Morrisons, Sainsbury’s or Tesco can be exceeded by the discounters,” he wrote. |
| Market share in the 12 weeks to 9 November: | |
| • Tesco: 28.7% | |
| • Asda: 17.2% | |
| • Sainsbury’s: 16.4% | |
| • Morrisons: 11.1% | |
| • The Co-operative: 6.2% | |
| • Waitrose: 5.1% | |
| • Aldi: 4.9% | |
| • Lidl: 3.5% |