Asda wins out as food market enters deflation

The data, covering the 12 weeks ending October 12, indicated that like-for-like grocery sales fell by 0.2%, their thirteenth successive fall and the lowest since Kantar Worldpanel’s records began in October 2006.

The market analyst said the trend partly reflected the impact of hard discounters Aldi and Lidl and the market’s competitive response.

Asda had emerged as the clear winner among the big four supermarkets, growing sales ahead of the market, up 1% on last year, boosting its share to 17.3%. Sainsbury’s sales slipped by 3.1% and Morrisons’ sales fell by 1.8%.

McKevitt told FoodManufacture.co.uk Asda’s consistent, long-term every day low pricing message was finally paying off in the current economic climate. “Asda for many years has talked about price in a relatively simple way.​

“​Consumers are responding to the simplicity of Asda. It does what it says on the tin. Its core shoppers, families looking for perhaps a bit more value, will understand what Asda is about.”​

‘Battling it out’​

“While the supermarkets are battling it out on price, the real winners are consumers,”​ said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

“Extensive price cutting by some supermarkets in a bid to win the price war means that customers are saving on everyday items such as vegetables and milk.​

“​While the retailers are suffering and losing share we are likely going to see a little bit of food deflation still coming through.” ​If food inflation had continued at last year’s four percent rate, consumers’ average weekly shop would cost £2.50 more, he said.

There was a ray of light for Tesco, said McKevitt. Although the beleaguered retailer had seen sales fall by 3.6% during the period, this was still its best figure since June.

Polarisation​

Polarisation of the grocery market continued, with discount and premium players continuing to gain share. Waitrose secured a record 5.2% market share, boosting sales by 6.8% over the past year and delivering continuous monthly growth since March 2009.

Although Aldi’s growth slowed slightly compared to recent months, its sales still rose by 27% over last year, resulting in a market share of 4.8%. Lidl’s sales grew by 18%, with its market share standing at 3.5%.

“We are seeing clear polarisation of the market with both the premium and discount ends of the market gaining share, while the mainstream grocers continue to be squeezed in the middle,”​ said McKevitt.

The mainstream supermarkets needed to turn the conversation to their strengths, such as range and shopping environment, to regain ground lost to the discounters, he said.