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Hot summer and football fever boost supermarket sales but Tesco and Sainsbury’s lose ground to Aldi and Lidl

News of further market share losses for Tesco will likely add more weight to reports over the weekend that it is looking to launch a new discount brand to rival Aldi and Lidl

football BBQ
Sales of booze and painkillers were particularly strong. Coincidence? I think not

The recent hot weather and England’s longer-than-expected run at the World Cup helped to boost sales in UK supermarkets over the past few months.

Grocery sales grew 3.6% in the 12 weeks to July 15 – the fastest rate so far this year – with alcohol, perhaps unsurprisingly, the standout performer.

“England may not have won the World Cup – but its journey to the semi-finals not only helped to kickstart the summer but supermarket sales to boot,” said Kantar Worldpanel’s head of retail and consumer insight Fraser McKevitt.

“Over the past month, football-frenzied customers visited supermarkets an extra 13 million times as they hurried to stock up on World Cup-viewing essentials

“Christmas and Easter aside, the week that the England football team played both Colombia and Sweden saw more spent on alcohol than ever before – a colossal £287mln.”

Don’t discount the discounters

But shares in Tesco PLC (LON:TSCO) and J Sainsbury plc (LON:SBRY) both dipped as they once again lost market share to Aldi and Lidl.

Kantar said the hot weather meant shoppers preferred to dash to smaller, more local stores rather than out-of-town superstores, which helped the discounters, as well as Co-op, which enjoyed its strongest period of growth in seven years.

Lidl – the official supermarket of the Three Lions – increased its market share by 0.3 percentage points to 5.4%, while Aldi reached 7.5% - an all-time high.

Asda best of ‘Big Four’

For the first time since 2014, Asda was the top performer among the ‘Big Four’ as sales climbed 3.7% over the three months. Wm Morrison Supermarkets PLC (LON:MRW) was next up with growth of 2.9%, meaning it now holds a 10.5% share of the market.

Buoyed by its convenience stores, Tesco saw sales rise 2.3% but the grocer’s market share fell back 0.3 percentage points to 27.6%.

Sainsbury’s sales grew just 0.8% in the period, causing its share of the market to decline by 0.4 percentage points to 15.6%.

READ: Tesco's new discount chain 'could open within six weeks'

Aldi and Lidl are now on the verge of hitting a combined market share of 13% for the first time, though the speculation over new entrants to the discount market could mean new pressures on the two retailers,” said McKevitt.

Today’s data is likely to add further weight to reports over the weekend that Tesco is looking to launch a new brand to try to claw back some of the market share it has lost to Aldi and Lidl.

A series of job adverts said the UK’s biggest supermarket was recruiting staff for a “new retail format”, widely reported to be a discount chain called Jack’s.

Of late, most of the supermarkets have been looking for ways to grow sales and market share in an increasingly competitive environment, with Aldi and Lidl putting pressure on the established grocers to keep their prices low.

Sainsbury’s is looking complete a multi-billion pound merger with Asda, Morrisons has inked a deal to supply McColl’s Retail Group PLC (LON:MCLS) 1,300 stores, while Tesco has also ventured into the wholesale market with its £4bn takeover of Booker.

Quick facts: Tesco PLC

Price: 214.8 GBX

Market: LSE
Market Cap: £21.04 billion

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