The grocery retail market has slipped into decline for the first time since January but Brexit uncertainty is “unlikely” to cause a substantial fall in volumes, experts have said.
Sales fell by 0.2 per cent across the multiple retailers during the 12 weeks ending 19 June 2016, new Kantar figures have shown, while like-for-like grocery prices declined by 1.4 per cent.
“While these latest figures predate the EU referendum result, the immediate economic uncertainty is unlikely to cause a substantial fall in grocery volumes, as demonstrated by the 2008 financial crisis when basic food, drinks and household sales proved resilient,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
“The decline is a continuation of the slow supermarket sector growth dating back to summer 2014, primarily a result of cheaper everyday groceries brought about by a retailer price war.”
But McKevitt said any long-term change in exchange rates “may threaten the current period of cheaper groceries”. “Historically, higher prices have led to consumers looking for less expensive alternatives such as own-label products, seeking out brands on promotion or visiting cheaper retailers,” he said.
Meanwhile, the combined share of discount retailers Lidl and Aldi has hit a record high of 10.5 per cent, with each holding 4.4 per cent and 6.1 per cent of the market respectively.
Over half (58 per cent) visited one of the two discounters in the past 12 weeks, Kantar said, with Lidl increasing sales by 13.8 per cent and Aldi by 11.5 cent on a year ago.
McKevitt added: “It’s been a good period for the smaller retailers. Co-op’s growth of two per cent has cemented its recent revival, heralding a full year of increasing sales. Meanwhile, at Waitrose, small but rapidly increasing sales of its premium Waitrose 1 brand have helped the retailer grow by 1.3 per cent. Waitrose has now had an unbroken period of growth dating back to 2009 – the best run of any retailer outside of the discounters.”
Overall sales at Tesco dropped by 1.3 per cent, while at Morrisons sales fell by 2.4 per cent, both reflecting the ongoing impact of store disposals. At Sainsbury’s sales fell by 1.4 per cent, while at Asda they were down by 5.9 per cent, with each of the big four losing market share on last year.