Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.

Business News

Grocers feel the squeezed middle's pain

The reality of how Britain's "squeezed middle" are managing their weekly shopping was laid bare yesterday by closely watched grocery data, with discount chains such as Aldi and Lidl and, at the other end of the spectrum, Waitrose benefiting from the spending patterns of "two nations".

The latest survey from Kantar Worldpanel showed a "sharp slowdown" in growth in the grocery sector over the most recent four weeks, after stores had enjoyed a boost from the heatwave, the Royal Wedding and Easter bank holidays in April. Edward Garner, a director at Kantar, said: "Against this murky background, the 'two nations' effect continues unabated."

This was highlighted by Aldi and Lidl reporting sales growth way ahead of their rivals in the 12 weeks to 12 June, giving them both record market shares of 3.4 per cent and 2.6 per cent, respectively. Mr Garner said: "Discounters are attracting some new customers but most of their growth is coming from gaining a greater share of the household shopping list. Customers are making a main shopping trip to their favourite store and this is then 'topped up' with selective shopping at the discounter – it has been dubbed 'canny shopping'."

Based on sales growth of 17.6 per cent, Aldi grew its market share by 0.3 per cent, while Lidl added the same amount after an equally stunning leap in sales of 17.9 per cent over the 12 weeks. However, at the top end of the market, more affluent customers – many of whom are helped by low mortgage rates – are continuing to give Waitrose a shot in the arm. The suprermarket chain, owned by the John Lewis Partnership, increased its sales by 8.9 per cent over the three months – nearly double the 4.7 per cent growth in the wider market, according to Kantar's survey of 25,000 households.

The trend for British people to treat themselves during straitened times is also boosting sales of premium own-label products, as shown by double-digit growth of Tesco's Finest range. But the overall pressure on the "squeezed middle" – the term used by politicians to describe middle-income families facing rising petrol, food and energy bills – was further illustrated by a marked slowdown in grocery spending over recent weeks.

Boosted by the purchasing of drink and party food for Easter and the Royal Wedding, sales in the grocery sector rose by 7.8 per cent in four weeks to 15 May, but tumbled to 2.5 per cent for the same period to 12 June.

Among the big four grocers, Asda saw its market share slip by 0.4 per cent to 16.9 per cent, following sales growth of just 2.1 per cent. Chris Hogbin, the analyst at Bernstein, said: "Asda's relative performance was worst in the group for the third consecutive month." Over the 12 weeks, Morrisons grew sales by 5.6 per cent, Tesco by 4.9 and Sainsbury's by 4.3 per cent.

But Asda said its rivals' figures were boosted by Kantar's data accounting for new stores and extensions.