Tesco PLC (LON:TSCO) shares got a lift today after the latest UK industry data showed supermarkets record their highest sales growth in five years, mostly driven by rising inflation but also seeing a heatwave boost.
Kantar Worldpanel said overall supermarket sales rose by 5.0% in the 12 weeks to June 18, a stark contrast to the 0.2% decline seen this time last year, despite the political and economic uncertainty of recent weeks.
Among the ‘Big Four’ sector players, market leader Tesco's sales saw its sales rise by 3.5% in the period, while J Sainsbury plc (LON:SBRY) saw sales increase by 3.1%, William Morrison Supermarkets PLC (LON:MRW) was up 3.7%, and Asda – owned by US giant Wal-Mart Inc (NYSE:WMT) – lagged with growth of 2.2% but continued to show an improvement.
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Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said, “The market’s robust performance this period is partly down to particularly weak sales growth last year and a continuing increase in like-for-like grocery inflation, which is now running at 3.2%.
“At this rate, that’s an extra £133 on the average household’s annual shopping bill, or the equivalent of seven additional shopping trips a year.”
Butter and fish prices rise sharply
He added: “Butter and fish fans will be feeling price increases most keenly; butter is almost 20% more expensive than last year while farmed salmon supply issues have been among the factors contributing to a 14% price rise across fresh and tinned fish.”
“However,” McKevitt said, “it’s not only inflation which is bolstering market growth. Recent spates of hot weather have given an early boost to traditional summer categories including ice cream and cider, with respective increases of 12% and 16% adding £58mln in sales, and that’s not including the most recent heatwave.”
Away from the Big Four, the Kantar data showed Lidl pipped Aldi to the title of the UK’s fastest growing supermarket for the first time since March, with sales growth of 18.8% just ahead of the latter’s 18.7% as the march of the German discounters continued.
Elsewhere, privately-owned frozen food specialist Iceland posted growth of 7.4% in the latest period, while mutual Co-op saw sales growth of 2.2%, and Waitrose – part of the employee-owned John Lewis Partnership - had its best sales growth since March 2012, with sales up 5.3%.
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Internet grocer Ocado PLC (LON:OCDO) saw sales up 10.7% compared with this time last year, with online shopping now accounting for 7.6% of grocery sales and growing by more than 10% each year, helped by Amazon.com Inc’s (NASDAQ:AMZN) push into the UK market .
Although the US retail giant, which earlier this month shocked the market with a US$13.7bn takeover bid for Whole Foods Market Inc (NASDAQ:WFM), currently holds less than 1% of online UK grocery sales.