Grocery market growth accelerates at fastest rate in 4 years

The UK grocery market share figures grew at the fastest rate since 2013, the latest figures from Kantar Worldpanel have shown, with all ten major retailers in growth for the first time since 2013.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said that following last quarter’s slow-down, the overall market had accelerated its growth by 3.7% in the 12 week period ending 23 April 2017. This was partly on the back of a late Easter boost, but also the result of higher inflation, with like-for-like prices +2.6% higher than the same period last year. Together, this had helped add around £1 billion worth of additional sales to the sector, McKevitt said.

He continued that although prices look set to rise further, the good news for shopper was that the rate of inflation had actually decreased sharply. “So it doesn’t look like we will see a return to the near double digit rates of inflation we saw in 2008 and 2009,” he said. “The current inflation rate of 2.6% is still below the average level experienced by shoppers between 2010 and 2014.”

He noted that although Brexit and economic uncertainty was increasing as summer advanced, consumers were not shying away from trading up to premium lines.

This was seen most clearly at Morrisons, the fastest growing of the big four multiple this quartet, with sales up +2.2%, bolstered by the “huge growth” of premium own label lines.

“Morrisons’ ‘The Best’ line is performing well following last year’s launch and has attracted more affluent shoppers through its doors,” he said. But its growth was behind the overall market and Morrisons’ total market share had slipped 0.2 percentage points to 10.4%.

Asda also saw gains, returning to positive growth with sales up 0.8%. It also attracted around a quarter of million new shoppers which helped it increase year-on-year sales for the first time since October 2014, along with a strong performance online. However its overall market share fell by 0.4 percentage points to 15.6%.

Aldi and Lidl continued to grow ahead of the wider market, up 18.3% and 17.8% respectively to their highest point in terms of market shares, at 6.9% and 5% respectively.

Meanwhile Sainsbury’s saw sales rise 1.7%, the biggest rise it has seen since June 2014, with growth coming from all three channels – convenience, larger supermarkets and online. But McKevitt pointed out that stronger growth among its rivals meant market share fell to 16.1% in the 12 week period.

Tesco was also back in growth, up 1.9% with own label sales seeing a 6% rise across the cheapest, standard and premium segments, but again its market share was down, falling by 0.5 percentage points to 27.5%.

By contrast, Ocado – included in Kantar’s analysis for the first time – has seen its market share double in the last two and half years, rising to 1.3% of the market. It is also growing at 10.8% – second to Aldi and Lidl and considerably ahead of the overall online grocery market, McKevitt pointed out, which is growing overall at 7.8%.

“While fewer than 3% of British households have shopped with Ocado in the past 12 weeks, these consumers are considerably more affluent than average, meaning the retailer performs well in high-value categories.”

Waitrose’s market share remained steady at 5.2% despite strong growth in its ‘Waitrose 1’ range helped to boost sales by 3.1% and The Co-op also saw sales up 2.6%, although market share fell by 0.1 percentage points to 6.1%.