The latest grocery share figures from Kantar Worldpanel, published on November 15, for the 12 weeks ending 6 November 2016, reveal a second month of good news for Tesco, which grew at its fastest rate in three years
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Tesco’s growth is is ahead of overall supermarket sales, where year-on-year sales increased by 0.8% for the second consecutive month. Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, says: “Tesco’s 2.2% growth is a considerable improvement on the numbers it was delivering this time last year, and indeed in 2014. Branded sales did see an increase but most of the gains were made through its own-label products, both at the cheaper and more premium ends of the price spectrum.
“Tesco’s farm brands continue to benefit from sales growth in fruit and vegetables, while the premium Tesco Finest range has grown by 6% in the past 12 weeks, notably in crisps, fresh meat and chilled convenience.”
More shoppers through the doors at Tesco is the primary driver of this increased share, but it is worth noting the effect of the lower prices for fresh produce offered by the farm brands. “It is helping produce be one of the fastest growing parts of the store,” says McKevitt. “Tesco Finest is also doing its bit, perhaps helping the attraction of more affluent shoppers…Much of Tesco’s growth has come from [these] more affluent shoppers returning to the store, and average spend per trip is up by 2.1% to £20.69.”
Deflation slows
The data also reveals that grocery prices have now been falling continuously since September 2014 and on a like-for-like basis goods are still 0.5% cheaper than last year, although this does represent a significant reduction in the rate of deflation since this summer. “We’re likely to see prices starting to creep up again in December, unless retailers choose Christmas to unleash a new round of price cuts,” warns McKevitt. “Although it’s tempting to link any potential price increases to Brexit and the devaluation of sterling, it’s worth remembering that deflation has been easing since December last year, well before the referendum.”
Looking ahead, McKevitt wonders what this could mean for suppliers to the supermarkets in 2017. “Next year will be interesting for supplier-retailer relationships,” he says. “With so much now being sold at round-pound price points, the option of a straight price increase is much trickier to implement.”
Iceland gains
At Iceland sales grew by 8.3% this period, well ahead of the overall industry and increasing market share by 0.2 percentage points to 2.1% as a result. “Much of Iceland’s growth is from its chilled and ambient lines, though there are still notable successes in the freezer aisles such as fish, ready meals and its product tie-ins with Slimming World and Pizza Express. Iceland’s recent high-profile store opening in Clapham, London – clearly targeted at millennials – supports the retailer’s wider strategy of steadily moving its product range upmarket.”
Best of the rest
Meanwhile, sales at Sainsbury’s declined by 0.7% this period, contributing to a 0.3 percentage point fall in its market share to 16.3%. Increased sales of Asda’s premium own-label lines helped slow the overall rate of decline to 5.0%, while Morrisons too saw a boost in premium own-label thanks to its The Best range, though total sales fell by 2.4% in line with the context of a smaller store estate.
Discount downturn?
Although the discount retailers are growing at their slowest rate since 2011, both Aldi and Lidl are still attracting new shoppers – vital to any supermarket’s growth and helped by continuing store openings.
Aldi grew sales by 10.2%, with 547,000 more shoppers visiting over the 12 weeks; a bigger increase in visitor numbers than any other retailer.
Lidl sales increased by 6.1%. Although this is a slower rate than in recent months it is still significantly faster than the overall market.
