Aldi becomes UK's fifth biggest supermarket as Tesco and Sainsbury slip

As Sainsbury's lost market share and Tesco's growth slowed, German discounter Aldi jumped up to become the UK's fifth largest supermarket as the grocery sector battled through a tricky few weeks.

New research on the sector from Kantar Worldpanel showed grocery prices continued to rise after the first Christmas increase since 2014, with like-for-like inflation on a basket of everyday groceries climbing to 0.7% over the past 12 weeks.

During that period Morrisons was the fastest-growing of the Big Four supermarkets, increasing its market share for the first time since June 2015 with a sales uplift of 1.9% year on year. Its market shares rose to 10.9% from 10.8%.

Tesco’s sales were up 0.3% year-on-year but its market share fell to 28.1% fro 28.5%.

Sainsbury’s sales stayed flat to leave it market share to slip 0.3 percentage points to 16.5%.

On Aldi, where sales grew more than 12%, Fraser McKevitt, Kantar's head of retail and consumer insight, noted that just a decade ago Aldi was the UK’s tenth largest food retailer, accounting for less than 2% of the grocery market.

"Since then the grocer has grown rapidly, climbing the rankings by an impressive five places to hold a 6.2% market share. Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year."

Fellow limited-assortment discounter (LAD) Lidl grew sales 9.4% over the 12 weeks, with its market share rising three percentage points to 4.5%.

McKevitt added that while healthy eating continued to be a strong theme across the industry, with overall sales of healthy own label lines increasing 3%, numbers of people partaking in 'dry January' were not huge, with sales of beer up 4% over the past 12 weeks, with wine up by 1% over the same period.

Nielsen data

Released on the same morning, retail data from Nielsen for the four weeks ending 28 January showed a 1.1% fall in grocers' till takings versus the same period last year, while purchase volumes fell 2.7%. This followed the 3.3% rise in takings in December.

Nielsen said the timing of New Year negatively affecting comparative sales, suggesting the 0.3% rise in till takings in the last three weeks of the period was a better reflection how the industry started the year.

Looking at January alone, beers, wine and spirits sales were up 2.1% and frozen food 1.8%, as the best performing super-categories.

On the outlook for 2017, Nielsen’s UK head of retailer and business insight, Mike Watkins, said: “We anticipate the industry to grow around 2% this year, an improvement on 2016, primarily due to the return of cost price inflation after three years of deflation and the depreciation of sterling – yet grocery spend remaining robust despite price rises.

"The discounters will continue to grow faster than this due to the acceleration of new store openings which could push their market share to 13% for the first ever time.”