Growth in grocery sales halved in the past 12 months in the wake of market slowdown, price deflation and the weak performance of categories such as frozen and ambient.
Research conducted by Information Resources showed that sales growth in the sector dropped to 3.5 per cent for the 52 weeks to March 2003, compared with 7.3 per cent the year before.
But Information Resources' head of analytics and merchandising, Neil Thorington, said that grocery is still performing better than other retail sectors.
Although massive volume increases are not being generated across the food market as a whole, many consumers are trading up and buying premium products. Chilled foods performed very strongly, as did beers, wines and spirits, and fresh meat, after the fall-out from foot-and-mouth. But sales growth of ambient, bakery and frozen products dipped.
Thorington said that Tesco and Asda are best placed to take advantage of the slowdown in the food sector and are maintaining volume.
'Asda and Tesco are well positioned to cope with this,' he said. 'The market remains very competitive and it's these guys who will continue to steal market share from Safeway, Somerfield and Iceland.'
UK grocery market sales, excluding non-food, were£63.77 billion for the year to March 2003.