Supermarkets under pressure as consumers share spend wider

Consumer spend is increasingly being shared across the high street, as pressure continues on the big four retailers, KantarWorldpanel has reported.

The latest supermarket figures from KantarWorldpanel showed flat growth across the market, up only 0.1% in the 12 weeks to 22 May 2016. The average household spend at the big four dropped 2.9%, it said, but although all four struggled to maintain market share – Sainsbury’s declined 1.2% to 16.2% and Asda’s 5.1% sales decline saw it 15.8% – shopper numbers at the supermarket dropped only 0.2%.

KantarWorldpanel director Edward Garner said this was a relatively positive performance at a time when food price deflation remained at 1.5%.

“What’s clear is that consumers aren’t flocking away from their stores,” he said, pointing out that 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%.”

Tesco showed signs of stablising after returning the smallest drop in sales of 1%, compared to Sainsbury’s 1.2% decline, which Garner said was driven by its recent shift towards more straight-forward pricing. Sales at Asda were down 5.1% compared to the same time last year, attributed to its low-price positioning as it battled the effect of the discounters’ growth.

Lidl and Aldi remained the fastest growing retailers, rising 14.2% and 11.4% respectively, with Waitrose saw sales gains of 2.1% to take its market share to a record 5.3%. The Co-operative also posted sales growth of 3.3%, boosting its market share to 6.2%.

“This is not just about low prices,” KantarWorldpanel said, pointing to the growth of the discounter’s increasingly premium offer. “Coupled with Waitrose’s strong performance this period the discounters are contributing to premiumisation”.

IGD retail analyst Priya Chandarana said Aldi was using its drinks category to stand out in the crowded grocery market and boost sales by exciting shoppers. She cited its sponsorship last week of London Wine Week as a canny move that took its range to an area with few of its stores through a futuristic pop-up shop in Shoreditch, highlighting its new online wine range through tasting, and enabling visitors to purchase wines though in-store tablets. It has also boosted its credentials through collaborating with MW Sam Caporn – a move that has worked for Lidl, she noted.

In March, The Co-op overhauled its BWS sector, adding 33 new wines and adopting a more tailored ‘cluster’ approach to ranging its stores to reflect the fact that different areas and customer profiles require different ranges.