Supermarkets fight back, led by Tesco whose recovery continues apace
Sales growths across the discounters Aldi and Lidl have hit their lowest level in five years. During the 12 weeks ending 5 November 2016, Aldi’s year-on-year sales revenue increased 11.3% –whilst Lidl’s increased 5.2%. Consequently, the combined figure across the two discounters is the lowest since the end of 2011. However, their current growth still far outstrips the 1.4% rate across the overall UK grocery market.
Between them, Aldi and Lidl account for 11.8% of UK grocery sales, up from 11.1% a year ago.
It’s inevitable that a time would come when the discounters experienced a slowing growth rate, and three factors have combined to see this happen. Firstly, the growth rates a year ago were particularly high due to a period of new store openings, so it’s always harder to maintain growth against that. Secondly, the supermarkets have had more time to alter strategies to fend off the discounters, particularly Tesco whose recovery continues apace – its 2.3% growth was the strongest in over 3 years. Finally, shoppers are still spending freely and we’ve seen a return of sustainable growth in the volume of items people are buying, helped by industry-wide price cuts, so one of the discounters’ USPs is less pronounced in shoppers’ minds.
Shoppers continue to spend freely, and this is despite the so-called Brexit impact, which in reality isn’t expected to "hit" consumer spending until next year.
The four weeks ending 5 November was the fourth consecutive month of growth for the UK’s leading supermarkets in both money taken at the till and volume of goods sold.
Revenues were up 1.1% ¹ versus the same period a year ago – the highest figure, excluding Easter-inflated periods, since the end of 2013, whilst volume rose 0.3%¹.
Driven by Halloween and Bonfire Night, the week-ending 5 November was particularly strong for the major supermarkets, with money taken at the checkout up 2.5% and volumes up 1.9% on last year. This, combined with their recent mini-revival over the last 16 weeks, suggests this Christmas will see an improvement for the supermarkets over last Christmas when sales were flat. As the festive ad campaigns kick-off, it will be interesting to see how much the supermarkets invest in media spend to support this new momentum. Last year Aldi and Lidl alone spent £27m² to help their sales growth.
All figures are from Nielsen Homescan Total Till unless otherwise stated
¹Source: Nielsen Scantrack Grocery Multiples
²Source: Nielsen, 12 weeks to 3/1/16, FMCG Press and TV spend