Discounters drive UK supermarket growth

The UK supermarket sector has recorded two consecutive months of growth in both volume and value sales for the first time in two years, according to Nielsen.

During the four weeks ending 10 September, value sales were up 0.4% compared with the same period a year ago, while volume sales increased by 0.3% – driven largely by the success of discounters Lidl and Aldi.

While tiny increases, neither volumes nor values have been in growth for two consecutive months in over two years, according to Nielsen, indicating a positive turnaround for the sector.

“With both value and volume growth most weeks since the middle of July we’re seeing the green shoots of recovery for the leading supermarkets in their battle against the discounters and price deflation,” says Mike Watkins, Nielsen’s UK head of retailer and business insight.

“A sustained period of good weather and soaring temperatures into September has also helped, as did an improved performance from Tesco, and continued good momentum at the likes of Co-op and Waitrose.”

BWS gets boost

Within this, it was beverages that saw the biggest rise in sales, with BWS across the 10 biggest supermarkets rising by 6.8% in the four weeks to 10 September.

This compared to packaged grocery category, which saw sales decline by 4.7%. This, it said, was due to shoppers choosing to “delay stocking up the larder, instead focusing on outdoor eating and foods for immediate meal preparation.”

Consequently, fresh food sales rose by +3.6% and deli goods by 3.4%.

During the 12 weeks to 10 September, Aldi saw the biggest year-on-year increase in sales at 15.5%, followed by Lidl at 7.3% and Marks and Spencer with 5% – the best -performing supermarket outside of the discounters.

In terms of market share, in the 12 weeks to 10 September, Tesco maintained its dominance with 27.9%, following by Sainsbury’s (15.5%), Asda (15.2%), Morrison’s (10.4%) and Aldi (6.4%).

Watkins says he expects competition to “remain intense, particularly with Tesco and, soon, Morrison’s back in growth.

“There’s a lot of market share to play for in the £40 billion sales opportunity up to the end of the year”, he added. “This is why the supermarkets need to maintain price cuts as part of a strategy to win back market share from the discounters who are expected to respond by increasing advertising spend again in the run up to Christmas.”