Discounters win Christmas crown, with Sainsbury's the big loser

Shoppers continued their shift towards discounters Aldi and Lidl over Christmas, while Asda and Tesco enjoyed the best of the season among the big four supermarkets.

UK grocers increased sales 1.6% to £29.3bn in the 12 weeks to 30 December, according to research by Kantar Worldpanel, which was the slowest rate of growth since March 2017.

Overall spend was tempered by lower inflation of 1.3% compared to the like-for-like inflation of 3.6% recorded the previous Christmas.

"This slower inflation rate helped shoppers to manage their festive budgets, with 60% of customers looking to make savvier decisions to make their money go further over the holidays,” said Fraser McKevitt, head of retail and consumer insight at Kantar.

German limited assortment discounters Aldi and Lidl achieved their highest-ever combined festive market share of 12.8%, with two-thirds of all households shopping at one or the other at some point in the period.

Another trend, identified in research from Nielsen also released on Tuesday, saw shoppers visit more supermarkets more frequently this Christmas. While the number of trips increased as high levels of vouchering and price discounting encouraged shoppers to visit a variety of supermarkets, the average spend per visit fell by 3% in the four week period to 29 December compared with an increase of 3% in average spend in December 2017.

As per Nielsen's research, grocery sales growth slowed to 1.8% in the last four weeks of the period, almost half the growth of 3.7% enjoyed at the same time last year.

WHO WON CHRISTMAS?

Kantar's calculations showed Aldi's 10.4% growth in the 12-week period was the fastest growth in the market.

The group's marketing efforts are paying off, especially in sales of vegetables, said McKevitt. "The return of Kevin the Carrot contributed to an 18% increase in carrot sales and nearly one in five households bought the vegetable at the discounter."

Lidl enjoyed growth of 9.4%, of which nearly one-third came through sales of branded products.

Asda came top among the big four, with overall growth of 0.7% as its ‘Extra Special’ range was the fastest growing of any premium line of the major retailers. Asda was also boosted by e-commerce sales rocketing 12%.

In second place was Tesco's growth of 0.6%, with a boost from an extra 125,000 customers, particularly at its larger stores. Kantar noted that Tesco was the only retailer to increase its promotional activity year-on-year, though its market share fell 0.3 percentage points year-on-year to 27.8%.

Morrisons, which also released its festive trading update on Tuesday, saw its growth slow to 0.1%, with its market share dropping to 10.6% from 10.8%.

Sainsbury’s was the worst performer again, with sales falling 0.4% and market share down 0.3 percentage points to 16.2%.

"With the Competition Market Authority’s verdict on the proposed Sainsbury’s-Asda merger predicted to be published in February, all eyes will be trained on Sainsbury’s over the next few weeks," said McKevitt.

Further down the line, Co-op was the only retailer to beat its 2017 growth rate, with growth of 3.2% as its market share increased for the seventh period in a row to 5.9%. Co-op is aiming to open 100 new stores in 2019, a third of in London and the south east.

Waitrose saw a decline of 1.7%, Iceland grew 1.8% and Ocado's growth printed at 1.3%.

Marks & Spencer, which Nielsen records but Kantar does not, was shown to have grown sales 0.4%

Nielsen’s UK head of retailer insight, Mike Watkins, said growth slowed this Christmas in comparison to last due to several factors: "consumer grocery shopping habits are changing, with shoppers now opting to spend less on doing one ‘big shop’, instead preferring more frequent, smaller trips to the supermarket, spreading the cost across multiple retailers to increase choice.

He also pointed to the Conference Board consumer confidence survey showing that 57% of households are not confident about their finances, with shoppers increasingly budget-consciousness and reacting to various promotions and price cuts to help them manage their household budget.

“It was a reasonable but not spectacular Christmas, indicative of how shoppers will now spread their Christmas spending across more retailers and different channels.”