Lidl and its rival discounter Aldi left the bigger supermarkets lagging behind with double-digit sales growth over the last three months as consumers sought bargains the face of rising prices.
Lidl's sales surged by 13.6 per cent, while Aldi saw a 13.4 per cent uplift in the 12 weeks to 20 February, far outstripping the pace at Sainsbury's, which led the bigger chains with 5.2 per cent growth, according to the latest industry figures from the market researcher Kantar Worldpanel.
The strength came against the backdrop of sluggish economic growth and rising prices, with grocery inflation rising to 3.7 per cent over the 12-week period, compared with the 3.1 per cent reported last month.
Just last week, the soft drinks manufacturer Britvic raised its forecast for price rises as it faced up to what it termed "unprecedented" inflation in the cost of key commodities.
Overall, market growth slowed to 3.9 per cent, against 4.2 per cent last month, indicating growing caution among consumers. Of the big four, Morrisons was second only to Sainsbury's with market-beating sales growth of 4.5 per cent. Tesco and Asda underperformed the market, with growth of 3.5 per cent and 3.1 per cent respectively.
Kantar retail analyst Fraser McKevitt said the strength of the discounters was, for now, down to higher spending by existing customers. "With economic uncertainty increasingly in the news it is no surprise that shoppers are being cautious with their spending," he said. "While the discounters are performing well, this is not due to an increase in new shoppers, but rather because their existing customers are spending more with them.
"The majority of people continued to seek value through promotions in the mainstream retailers." Growing sales fed through to a bigger chunk of the market for the discounters, with Aldi expanding its market share to 3.1 per cent, up from 2.8 per cent last year, and Lidl growing its share to 2.4 per cent from 2.2 per cent. Of the bigger players, Sainsbury's continued its strong run. The supermarket group has been expanding its share every month since March 2009.
The latest figures show another increase, taking its share to 16.5 per cent, compared with 16.3 per cent last year. Morrisons stood firm with a 12.3 per cent share, while Tesco and Asda boasted shares of 30.3 per cent and 16.9 per cent respectively.
Waitrose grew its market share to 4.4 per cent, the highest in its history and slightly ahead of the 4.3 per cent seen last year. The chain also managed to grow sales by 6.6 per cent, ahead of the big four, but behind its record of double-digit performances for much of the past two years.
Separate figures from Nielsen also showed that shoppers were being hit by higher prices – and that retailers were doing their best to entice consumers by putting on promotions, which made up an increasing share of the value of sales.
In contrast, overall volume growth across the sector in the four weeks to 19 February had remained subdued at 0.7 per cent, reinforcing the picture of a cautious consumer. A similar trend was seen at the height of the recession a year or so ago.
"As expected, shoppers are feeling the squeeze," Mike Watkins, Nielsen's senior manager for retailer services, said. "Our numbers indicate that people have begun to shop around more and are looking for savings when they visit a supermarket – this is indicative of a consumer actively looking for trade-offs."