The budget grocers Aldi and Lidl have upped the pressure on the big supermarkets by swiping shoppers and increasing market share.
Aldi's sales rose 35.3 per cent in the 12 weeks to 30 March, its fastest ever growth rate, to notch up a record 4.6 per cent share of the grocery market, according to Kantar Worldpanel data released yesterday. Lidl recorded a 17.2 per cent surge in sales, as its share rose to 3.4 per cent from 2.9 per cent over the same period last year.
Shoppers have increasingly sought out the German-owned food retailers, as they open rafts of new stores offering low prices on exclusive lines.
Their growth over the past year has hurt larger rivals. Beleaguered Morrisons was the biggest loser of the "big four" grocers; its sales slowed by 3.8 per cent and it now holds an 11.1 per cent market share, down from 11.6 per cent last year. Tesco, Asda and Sainsbury's all reported slowing sales, as the growth of the discounters, as well as premium grocer Waitrose, hit performance.
Tesco, Asda and Morrisons have all pledged to lower prices to fight off increasing pressure from Aldi and Lidl. They have pledged to drive through price cuts worth £2.4bn, but some analysts have questioned whether that will be sufficient to defeat the discounters.
Sainsbury's 1.7 per cent slide in sales will come as a blow to outgoing chief executive Justin King, who departs in July after an almost unblemished sales record at the retailer.
Edward Garner, director of Kantar Worldpanel, said: "All the big four supermarkets have faced declining sales over the past 12 weeks, which has been accentuated by the late falling of Easter. Nevertheless, they have also seen worrying share declines, with the most resilient performance coming from Asda."
Margins at the big groups are already under pressure. In February, Tesco abandoned its target of a 5.2 per cent operating margin.
"The margin will be what the margin will be," it said.Reuse content