Aldi is ‘stand-out’ supermarket in ‘sluggish’ market: City
UK supermarkets endured a sluggish August and September, after the hot July boosted sales. Nielsen reported value growth of 2.1%, with inflation 3.5%, while volumes fell by 1.5% and like-for-like volumes down by up to 4%.
“Such conditions represent the return of a weak market,” said analysts Clive Black and Darren Shirley. “But what is different, and perhaps worrying at this stage, is that the UK economy seems to be recovering without the supermarkets demonstrably benefiting.”
Bucking the trend was Aldi, with sales growth 26% ahead, according to Nielsen. “With robust comparatives and noting a reasonable boost from new space, the fact remains that Aldi is very much in a groove and must be enjoying very strong like-for-like volumes” said Black and Shirley.
‘Aldi is very much in a groove’
While Aldi remained a modest player, the analysts predicted that the discount retailer’s progress must be concerning value-based superstores Asda, Morrisons and Tesco.
Fellow hard discounter Lidl achieved 12% sales growth, with Waitrose up by 7.8% and Iceland up by 4.9% over the four-week period. Marks & Spencer managed 5.3% growth over the same period.
Of the big four supermarkets, Sainsbury was the winner, said Black and Shirley. While its sales growth of 3.6% was, “a slowdown of sorts on recent momentum, albeit against Paralympic comparatives” the retailer continued to outperform its multi-format peers.
Tesco was performing slightly behind the market at 1.8%, with its various initiatives – ‘Every Day Value’, ‘Love Every Mouthful’ and ‘Price Promise’ – yet to deliver stronger momentum to date, they said.
Asda found the four weeks “heavy going” – with Nielsen reporting 1% sales growth, implying negative like-for-like volumes, while Morrisons trailed the pack.
‘Asda heavy going’
Its total sales were slightly positive, which, after new space and inflation, implied more than 4% negative like-for-like sales. In Morrisons’ vertically integrated business, that also implied negative operational gearing, said Black and Shirley.
Summing up, the analysts were “most concerned for the robustness of our Morrisons forecasts” – even after downgrading their estimates for the business.
Meanwhile, four-in-10 UK households now visit a discounter for grocery shopping, according to Nielsen. Nearly 40% of households shopping for groceries visited Aldi or Lidl.
Mike Watkins, Nielsen’s UK head of retailer and business insight, said: “Although September got off to a good start, sales growths weakened when compared with the moderately successful period involving last summer’s Paralympic Games.
“This suggests that sustained sales momentum remains elusive for many retailers and will continue to do so until the next wave of promotional activity.”
Many supermarkets continued to reinforce their price message, such as highlighting ‘back to school’ offers and fuel savings, he added. While TV and press spend was down, Tesco doubled the investment in its Love Every Mouthful campaign to more than £5M.
