The grocery sector slowed last month in the four weeks to January 23, when the hard discounters returned to form in what was a tough consumer climate.
The supermarkets’ sales rose just 1.1% in the four weeks to January 23, compared with 6.3% in the previous period, according to Kantar Worldpanel. Tesco was the weakest of the big four, with 0.8% growth, while Morrisons showed 1.5% growth, Asda 1.7% and Sainsbury’s led the pack with 2.8%.
Bernstein analyst Christopher Hogbin said while the data suggests a slowdown after a strong Christmas, growth in future would be supported by rising food inflation.
Hogbin said: “Although there have been some modest differences in the growth rates of the UK’s leading grocers, generally we see a picture of the big four converging around similar growth rates.”
He said exposure to alternative growth channels, such as international and retailing services, will be increasingly important drivers of growth. Hard discounters Aldi and Lidl showed growth of 7.3%, the strongest relative to the big four for two years. At the top end of the market Waitrose continued to perform well, with growth up 2.1%.
For the 12 week period to January 28, Aldi and Lidl managed near-10% growth and lifted the total discounters’ market share from 5.9% last year to 6.1% in the latest period.
Food inflation stood at 3.1% for the period, largely unchanged. Most price increases are being mitigated by the high level of promotions.