WM Morrison Supermarkets PLC (LON: MRW) has come out on top of the so-called Big Four supermarkets, reporting the strongest growth in sales in the 12 weeks to 25 February.
Data from research firm Nielsen showed Morrisons achieved a 1.9% year-on-year increase in sales during the period, adding to evidence that the restructuring under chief executive David Potts is starting to bear fruit.
Tesco plc (LON:TSCO), which has also been recovering as part of an overhaul of the business, recorded an 0.8% increase in sales in the 12-week period.
In contrast, J Sainsbury plc’s (SBRY) sales fell 0.3% while Asda sales declined 0.9%.
In terms of market share, however, Tesco led the charge among the Big Four with 27.4%. However, its market share fell slightly from the 27.7% recorded the same period a year earlier.
Morrisons had 10% market share, unchanged from the previous year, while Sainsbury’s share dipped to 15.8% from 16.1% and Asda’s dropped to 14.3% from 14.7%.
The Big Four supermarkets have been engaged in a pricing war as they continue to lose market share to smaller discounters including Aldi and Lidl.
Aldi’s market share rose to 7.4% from 6.8% and its sales jumped 12% during the 12 weeks.
Lidl’s share of the market grew to 4.8% from 4.5% and sales increased 9.1%.
“The difference today is that Aldi and Lidl aren’t solely associated with low-priced brands, having been very astute at promoting the quality and price of their private-label range to appeal to a wider array of shoppers,” said Mike Watkins, Nielsen’s UK head of retailer and business insight.
“Aldi and Lidl’s momentum continues due to new stores opening and the average shopper spending more – testament to the wider and higher quality of products available.”
Weak pound pushing inflation higher...
On top of fierce competition from discounters, supermarkets are facing growing price pressures as a weaker pound following the Brexit vote pushes import costs higher.
Watkins said an increase in inflation of grocery items meant consumers were starting to be more careful about how they spend.
A separate report from Kantar Worldpanel today showed comparable grocery inflation had doubled to 1.4% in the 12 weeks to 26 February from 0.7% in the 12 weeks to 29 January.
Price rises were recorded across staples including tea, fish and butter during the period, although prices of eggs and bacon fell.
The report also showed Morrision was ahead of Tesco, Asda and Sainsbury with sales rising 2.6%, the fastest growth in five years. It held its market share at 10.6%.
Tesco sales rose 0.6%, a sixth period of growth in a row, but its market share fell 0.5 percentage points to 27.9%.
Sales at Sainsbury’s rose 0.3% while market share edged down 0.3 percentage points to 16.5%.
Asda was the only retailer to see sales fall during the past 12 weeks with a 0.8% decline.
Kantar’s head of retail and consumer insight, Fraser McKevitt, said while consumers may be starting to feel a “very slight pinch”, increased inflation has led to overall market growth.
“Simultaneously, combined sales at the UK’s four largest supermarkets increased by 0.5% year-on-year,” he said.
Still, discounter Lidl was Britain’s fastest growing supermarket with sales rising 13% while rival Aldi grew sales 12.9% to reach a record market share of 6.3%.