Supermarket sales rally as Morrisons enjoys best growth in five years
Led by a growth spurt at Morrisons the like of which it has not enjoyed in five years, UK supermarket sales grew at their fastest rate in almost two and a half years.
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Grocery sector sales grew 2.3% in the 12 weeks ending 26 February compared to the same time last year, helped by Sainsbury’s returning to growth for the first time in a year and Tesco increasing sales for the sixth period in a row, according to a survey by Kantar Worldpanel.
Supermarket prices kept crawling higher, with like-for-like inflation doubling since last month to an annual increase of 1.4%, with small price rises across staples including butter, tea and fish.
Morrisons accelerated ahead of the rest of the sector with a 2.6% sales increase that was its fastest growth in five years, enabling it to hold market share steady at 10.6%.
Tesco lost market share, down by 0.5 percentage points to 27.9%, even though sales picked up for the sixth period in a row, which Kantar said was the first run like that since January 2014.
Sainsbury’s also gave up some market share but bounced back to growth with sales up 0.3%. Its market share slipped by 0.3 percentage points to 16.5% of the market.
The reason for the loss of market share was strong growth elsewhere, especially the continued surge of German discounters Aldi and Lidl, which grew sales 12.9% and 13% respectively for market shares of 6.3% and 4.6%.
Meanwhile, Asda was the only supermarket group to see sales fall, though Kantar pointed out that a decline of just 0.8% represents a significant improvement on recent woes and is its best performance since November 2014.
Nevertheless, its market share shrank from 16.2% to 15.7%, though it still retains a much large slice than fourth-placed Morrisons' 10.6%.
Iceland also grew sales at a rapid 8.8%, with Waitrose expanding its total till roll 2.9% and Co-Op by 1.7%.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said that the doubling in like-for-like inflation, when placed in a longer-term context, was still fairly minimal.
“Staples such as butter, tea and fish all saw prices rise by more than 5% during the past 12 weeks, as fruit and vegetables – many of which are imported – also saw an uptick in price.
"However, it’s important to point out that inflation is still far from universal, with prices actually falling across a number of categories including crisps, bacon and eggs.
With other data suggesting consumers are starting to feel the pinch, increased inflation has helped the grocery market grow, with combined sales at the UK’s four largest supermarkets increasing 0.5% year on year.
"This is a timely reminder that despite the huge interest in the discounters during recent years the big four remain a force to be reckoned with," said McKevitt, "they still hold just over 70% of the market, with almost 99% of the population shopping in a Tesco, Sainsbury’s, Asda or Morrisons during the latest quarter.”